The Revenue Recognition Principle

question 157

Multiple Choice

The revenue recognition principle:

• A)Prescribes that accounting information is based on actual cost.
• B)Provides guidance on when a company must recognize revenue.
• C)Prescribes that a company report the details behind financial statements that would impact users' decisions.
• D)Prescribes that a company record the expenses it incurred to generate the revenue reported.
• E)Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

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Definitions:

Substitute Goods

Substitute goods are products or services that can replace or be used in place of another due to similarities in function or characteristics, affecting consumer choices.

Above Market Rate

A price or rate that is higher than the prevailing market standard or average.

Insolvent

A financial state in which an individual or an entity cannot meet their debt obligations as they come due because their assets do not exceed their liabilities.

UCC

In the United States, the Uniform Commercial Code is a detailed compilation of statutes that regulate commercial dealings.