The Principle That States Revenue Should Be Recognized at the Time

question 75

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 realization.

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Definitions:

Margin of Safety

The difference between actual sales and sales at the break-even point, indicating the risk level of not covering fixed costs.

Break-Even Sales

The sum of money needed to offset all constant and fluctuating expenses, achieving a financial break-even point with no gains or deficits.

Current Sales

The total revenue generated from sales activities in the most recent accounting period.

Break-Even Point

The production level at which total revenues equal total expenses, and the company makes neither a profit nor a loss.