Question

Revenue is generally recognised at the point of sale denotes the concept of _______.

• A. Going concern
• B. Revenue realization
• C. Historical cost
• D. Materiality

Answer 1

The correct option is B Revenue realization

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.

In conclusion, the revenue shall be recognized at the point where sale is made, and not when the cash is received.