Homework Answers
Solution :
The Answer is (B) It has been earned not before.
Explanation :
As per the Revenue recognition principle, revenue is recognised when it has been earned and not before that. Generally revenue is earned when goods has been transferred and services has been rendered and there is certainity about the consideration. As per the principle if cash has been received before it has been earned, it will be recorded as an obligation. So the Answer is (B) and rest all answer are incorrect as they don't get fit in Revenue Principle.
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Under the revenue recognition principle, a good or service is considered transferred when A. all performance obligations have been specified B. the business has received cash from the customer OC. the customer obtains control of the good or service D. the transaction price has been agreed to
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