FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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**Understanding the Current Revenue Recognition Principle**

The image displays a multiple-choice question designed to test knowledge of the current revenue recognition principle in accounting. It provides four possible answers, asking which one best describes this principle.

1. **Recognize revenue in the accounting period when the performance obligation is satisfied.**
2. **Recognize revenue in the accounting period when cash is received.**
3. **Recognize revenue when it is earned.**
4. **Identify separate performance obligations in the contract.**

The question focuses on determining the correct timing and criteria for recognizing revenue according to modern accounting standards, specifically those outlined by the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). 

The principle aims to ensure that revenue is accurately reported in relation to when a business has fulfilled its contractual obligations, rather than relying solely on cash transactions.
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Transcribed Image Text:**Understanding the Current Revenue Recognition Principle** The image displays a multiple-choice question designed to test knowledge of the current revenue recognition principle in accounting. It provides four possible answers, asking which one best describes this principle. 1. **Recognize revenue in the accounting period when the performance obligation is satisfied.** 2. **Recognize revenue in the accounting period when cash is received.** 3. **Recognize revenue when it is earned.** 4. **Identify separate performance obligations in the contract.** The question focuses on determining the correct timing and criteria for recognizing revenue according to modern accounting standards, specifically those outlined by the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). The principle aims to ensure that revenue is accurately reported in relation to when a business has fulfilled its contractual obligations, rather than relying solely on cash transactions.
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