Revenue Is Not Recognized Under the Realization Principle Unless the Earnings

question 85

True/False

Revenue is not recognized under the realization principle unless the earnings process is complete or virtually complete and there is reasonable certainty about the expected collection of the asset received.

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Definitions:

Debited

An accounting term describing the recording of an increase in assets or a decrease in liabilities and equity.

Liabilities

Financial obligations or debts a company owes to others, which must be settled over time through the transfer of assets, provision of services, or other economic benefits.

Dividends Distributed

The portion of a company's earnings paid out to shareholders.

Accounting Equation

The basic principle underlying accounting that asserts that Assets = Liabilities + Equity, illustrating the balance among what a company owns and owes at any point in time.