The Core Revenue Principle States That

question 226

Multiple Choice

The core revenue principle states that:

• A) Companies recognize revenue when the earnings process is virtually complete and it is probable that payments will be received.
• B) Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.
• C) Companies recognize revenue when goods or services are transferred to the customer and payments are received.
• D) Companies recognize revenue when the goods or services are transferred to the customer in an arm's length transaction.

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Definitions:

Numeraire

A standard unit of account in economics used to compare the value of goods and services.

Perfect Substitutes

Goods that a consumer is completely indifferent between, meaning they will substitute one for another at a constant rate regardless of any change in price or utility.

Perfect Complements

Goods that are always used together in fixed proportions, where the utility or value of one item increases with use of the other.

Pareto Efficient

An allocation condition in resources where any attempt to favor one individual results in a disadvantage to another.