As a General Principle, Under the Accrual Basis of Accounting

question 123

Multiple Choice

As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?

• A)Revenue is recognized when there is completion of the earnings process, only.
• B)Revenue is recognized when there is receipt of assets from the customer, only.
• C)Revenue is recognized when there is completion of the earnings process and receipt of assets from the customer.
• D)Revenue is recognized when there is expiration of the warranty period, only.
• E)Revenue is recognized when there is receipt of the final payment, only.

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Definitions:

Long-term Liability

Long-term Liability is any financial obligation of a business that is due for a period exceeding one year, such as bonds payable, long-term loans, and lease obligations.

Premium on Bonds Payable

The amount by which the sale price of a bond exceeds its face value, representing additional cost to the issuer over the bond's life.

Bonds Payable

Long-term debt securities issued by a company to investors, indicating a promise to pay the principal amount at a specified maturity date along with periodic interest payments.

Journal Entry

A record of a financial transaction within a company's accounting system, indicating the affected accounts and their respective debit or credit amounts.