The Revenue Principle Requires That a Business Record Revenue When

question 108

Multiple Choice

The revenue principle requires that a business record revenue when the business:

• A)receives an order from a customer.
• B)prepares the invoice for the customer.
• C)delivers goods or services to a customer.
• D)receives payment from a customer.

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Definitions:

Plant Assets

Tangible assets that are used in the operations of a business and are not intended for resale, including buildings, machinery, and equipment.

Natural Business Year

The fiscal year that ends when a business's activities have reached the lowest point in its annual operating cycle, theoretically the most optimal time for financial reporting.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate years.

Contra Account

An account used in accounting to offset or reduce the balance of a related principal account.