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Basic Question 2 of 5
The generally accepted accounting principle that determines when revenue should be recorded in the accounting records is called ______.
B. the realization principle
C. the time period principle
D. accrual basis of accounting
E. double-entry accounting
A. the matching principle
B. the realization principle
C. the time period principle
D. accrual basis of accounting
E. double-entry accounting
User Contributed Comments 10
| User | Comment |
|---|---|
| frenchfurt | i'm not agree with this answer. "when revenue should be recorded" :refers to revenue recognition. why it is not the principe of realization" ? los b Matching rule : "let the expenses follow the revenues". what do you think about it? |
| brimann | The general rule for revenue recognition includes the concept of realizability: Revenue, measured as the amount expected to be collected, can be recognized when goods or services have been provided and their cost can be reliably determined. |
| bobert | Is it not D just because it isn't a principle, but rather a method of accounting? |
| RCapistrano | Matching principle pertains to matching the cost generated by the products sold (which generated revenue) for a given period. The issue,"...when revenue should be recorded in the accounting records.." is solved by applying the revenue recognition criteria and B is one of them. |
| bundy | Its in the book Reading 32 General Priciples |
| vatsa | I don't agree answer is B. General principle for revenue recognition is Accrual accounting, recognize revenue when it occurs. |
| munro | everything in accounting is on accrual basis. for revenue recognisation, it's the realization principle: the revenue needs to be realized before being recorded in the books. |
| abhinavkapoor | GAAP Principle states: Revenue should be recorded as soon as it is realized. |
| Trofimenko | is it from sfac 5? |
| Bhidhi | Revenue is generally recognised when it is: 1. realized or realizable, & 2. earned |
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Learning Outcome Statements
describe general principles of revenue recognition, specific revenue recognition applications, and implications of revenue recognition choices for financial analysis
CFA® 2025 Level I Curriculum, Volume 2, Module 2.