Question

Revenue is generally considered as realized ________.

• A. At the time of agreement to sell
• B. At the time of receipt of cash
• C. At the time of sale
• D. At the time of production of goods

Answer 1

The correct option is C At the time of sale

The revenue recognition principle is a cornerstone of accrual accounting together with the matching principle. They both determine the accounting period in which revenues and expenses are recognized.

According to the principle, revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received.

Hence, the revenue is generally recognized at the time of sale.