Revenue Recognition Means That

question 19

Multiple Choice

Revenue recognition means that:

• A) revenue is not recorded until payment by the customer.
• B) the recording of expenses is delayed until the related revenue has been earned.
• C) revenue is recorded when earned.
• D) revenue when a deposit is received.

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Definitions:

Direct Write-off Method

An accounting approach where uncollectible accounts receivable are directly written off against income at the time they are deemed unrecoverable.

Accounts Receivable

The total amount of money owed to a company by its customers for goods or services provided on credit.

Direct Write-off Method

A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account at the time they are determined to be uncollectable.

Expense

Outflows or other using up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.