As a General Rule, Revenues Should Not Be Recognized in the Accounting

question 257

True/False

As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received.

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Definitions:

Planning Budget

A budget created at the beginning of the budgeting period, reflecting the expected costs and revenues based on forecasted levels of activity.

Manufacturing Overhead

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as utilities and rent for the manufacturing facility.

Administrative Expenses

Costs related to the general management and administration of a business, such as salaries of executive officers and costs of the legal department.

Net Operating Income

A financial metric that shows a company's profitability from its core business operations, excluding expenses and incomes from other sources.