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Question

Revenue from sales of products is generally accounted in the period in which __________.


A
cash is collected
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B
sales in made
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C
products are manufactured
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D
none of the above
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Solution

The correct option is A sales in made

Business transactions are recorded when they occur and not when the related payments are received or made. This concept is called accrual basis of accounting and it is fundamental to the usefulness of financial accounting information.

Thus sale of products is recorded when sales is made and not when cash is collected or when products are manufactured.

Principles and Practice of Accounting

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