Why Do Generally Accepted Accounting Principles Require the Application of the Revenue

question 70

Multiple Choice

Why do generally accepted accounting principles require the application of the revenue recognition principle?

• A)Failure to apply the revenue recognition principle could lead to a misstatement of revenue.
• B)It is easy to apply the revenue recognition principle because revenue issues are always easy to identify and resolve.
• C)Recording revenue when cash is received is an objective application of the revenue recognition principle.
• D)Accounting software has made the revenue recognition easy to apply.

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Definitions:

Edema

Swelling caused by excess fluid trapped in the body's tissues.

Osmotic Balance

The regulation of water and solute concentrations across membranes to stabilize internal conditions of an organism or cell.

Inflammation

The reaction of the body to harm or disease, marked by inflammation, heat, enlargement, and discomfort.

Coagulation

The process by which blood changes from a liquid to a gel, forming a clot, which is crucial for stopping bleeding.