Asked by Lionell Martin Jr on Jun 17, 2024
Verified
The two conditions for revenue recognition are occasionally satisfied even before a sale of product occurs.
Revenue Recognition
Accounting principle determining when revenue should be recorded in the financial statements, typically at the time goods or services are provided.
- Understand the conditions under which revenue recognition occurs, and the differences between accrual and cash basis accounting.
Verified Answer
MJ
Michael JordanJun 23, 2024
Final Answer :
True
Explanation :
Revenue can be recognized before a sale occurs if the two conditions are met - (1) there is persuasive evidence of an arrangement with the customer, and (2) delivery has occurred or services have been rendered. Examples of situations where revenue can be recognized before a sale includes subscription-based businesses, where customers pay upfront for a service that will be provided over a period of time.
Learning Objectives
- Understand the conditions under which revenue recognition occurs, and the differences between accrual and cash basis accounting.
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