The Revenue Recognition Concept

question 168

Multiple Choice

The revenue recognition concept

• A) is not in conflict with the cash method of accounting
• B) determines when revenue is credited to a revenue account
• C) states that revenue is not recorded until the cash is received
• D) controls all revenue reporting for the cash basis of accounting

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Definitions:

Credit Analysis

The process of evaluating an individual's or entity's ability to repay a loan or meet financial obligations.

Default

The failure to meet the legal obligations or conditions of a loan or other financial agreement, such as not making scheduled payments.

Credit Customer

An individual or entity that purchases goods or services on credit, with an agreement to pay at a later date.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in the calculation of net present value.