Which Two of the Following Determine When Revenue Is Recorded

question 14

Multiple Choice

Which two of the following determine when revenue is recorded on the financial statements based on the recognition principle?
I.Payment is collected for the sale of a good or service.
II.The earnings process is virtually complete.
III.The value of a sale can be reliably determined.
IV.The product is physically delivered to the buyer.

• A)I and II only
• B)I and IV only
• C)II and III only
• D)II and IV only
• E)I and III only

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Definitions:

Investment Adjustment

An investment adjustment refers to changes made to the carrying amount of an investment due to factors such as dividends received or changes in the investee's equity.

Carrying Value

The recorded value of an asset in a company's financial statements, considering factors like depreciation or amortization.

Investment Sale

A transaction in which assets, often securities, are sold to another party for the purpose of generating funds or realizing profits.

Equity Method

This accounting approach is applied when an investor holds significant control over an investee, indicating a substantial interest but not full control or majority stake.