Which of the following is not a criterion to recognize revenue under GAAP? A. The earnings process must be completed. B. A product or service must be provided. C. Cash must be collected. D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.
Which of the following is not a criterion to recognize revenue under GAAP? A. The earnings process must be completed. B. A product or service must be provided. C. Cash must be collected. D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.
Which of the following is not a criterion to recognize revenue under GAAP?
A. The earnings process must be completed.
B. A product or service must be provided.
C. Cash must be collected.
D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.
Expert Solution & Answer
To determine
Concept introduction:
Financial accounting or reporting is used to prepare financial statements to present the financial position of the entity. Financial accounting is mandatory for an entity and it follows Generally Accepted Accounting Policies (GAAP) for accounting. The statements produced under financial accounting include the Income statement, balance sheet and statement of cash flows. Users for financial information can be internal as well as external like lenders, creditors, government, employees, and owners etc.
To choose:
The correct option.
Answer to Problem 1MC
Cash must be collected
Explanation of Solution
Explanation for correct answer:
Collection of the cash is not a criterion to recognize revenue under GAAP. Hence, the correct option is C.
Explanation for incorrect answers:
A. This is one of the criteria to recognize revenue under GAAP. Hence, this option is incorrect.
B. This is one of the criteria to recognize revenue under GAAP. Hence, this option is incorrect.
D. This is one of the criteria to recognize revenue under GAAP. Hence, this option is incorrect.
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Which of the following is not a criterion to recognize revenue under GAAP?A. The earnings process must be completed.B. A product or service must be provided.C. Cash must be collected.D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process
Which of the following is not a criterion to recognize revenue under GAAP?
GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.
The earnings process must be completed.
A product or service must be provided.
Cash must be collected
O O O O
Which accounting principle requires that
revenue be recognized when it is earned,
regardless of when payment is received?
A. Matching Principle
B. Revenue Recognition Principle
C. Historical Cost Principle
D. Full Disclosure Principle
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