The Principle That States Revenue Should Be Recognized at the Time

question 13

Multiple Choice

The principle that states revenue should be recognized at the time goods are sold or services rendered is called:

• A) Adequate disclosure
• B) Conservatism
• C) Matching
• D) Revenue recognition

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Definitions:

Income Statement

A financial statement that reports a company's revenues, expenses, and profits over a specific period, showing the net income or loss.

Return On Stockholders' Equity

A measure of financial performance calculated by dividing net income by average shareholders' equity, showing how effectively management uses equity from shareholders to generate profit.

Preferred Dividends

Payments made to preferred shareholders of a company before dividends are paid to common shareholders, typically fixed and paid at regular intervals.

Average Common Stockholders' Equity

It represents the average equity stake that common shareholders have in a company over a certain period, calculated by averaging the opening and closing common stockholders' equity balances.