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Basic Question 2 of 5
The generally accepted accounting principle that determines when revenue should be recorded in the accounting records is called ______.
B. the realization principle
C. the time period principle
D. accrual basis of accounting
E. double-entry accounting
A. the matching principle
B. the realization principle
C. the time period principle
D. accrual basis of accounting
E. double-entry accounting
User Contributed Comments 10
| User | Comment |
|---|---|
| frenchfurt | i'm not agree with this answer. "when revenue should be recorded" :refers to revenue recognition. why it is not the principe of realization" ? los b Matching rule : "let the expenses follow the revenues". what do you think about it? |
| brimann | The general rule for revenue recognition includes the concept of realizability: Revenue, measured as the amount expected to be collected, can be recognized when goods or services have been provided and their cost can be reliably determined. |
| bobert | Is it not D just because it isn't a principle, but rather a method of accounting? |
| RCapistrano | Matching principle pertains to matching the cost generated by the products sold (which generated revenue) for a given period. The issue,"...when revenue should be recorded in the accounting records.." is solved by applying the revenue recognition criteria and B is one of them. |
| bundy | Its in the book Reading 32 General Priciples |
| vatsa | I don't agree answer is B. General principle for revenue recognition is Accrual accounting, recognize revenue when it occurs. |
| munro | everything in accounting is on accrual basis. for revenue recognisation, it's the realization principle: the revenue needs to be realized before being recorded in the books. |
| abhinavkapoor | GAAP Principle states: Revenue should be recorded as soon as it is realized. |
| Trofimenko | is it from sfac 5? |
| Bhidhi | Revenue is generally recognised when it is: 1. realized or realizable, & 2. earned |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
describe general principles of revenue recognition, specific revenue recognition applications, and implications of revenue recognition choices for financial analysis
CFA® 2024 Level I Curriculum, Volume 2, Module 2.