Question

7.Rules of revenue recognition 1 point
determine that earning process
should be either complete or
near completion under: *
1) Realization Concept
2) Materiality Concept
3) Historical Record Concept
4) Accounting Period Concept​

Answer 1

Answer:

1) Realization concept.

Answer 2

REALIZATION CONCEPT

Rules of revenue recognition determine that earning process should be either complete or near completion under (1) Realization concept.

GETTING TO KNOW MORE ABOUT REALIZATION CONCEPT:

* Revenue may only be recognised if the underlying items or services linked with the revenue have been provided or rendered, according to the realisation principle.

* As a result, revenue is only recognised once it has been generated. When a corporation attempts to hasten revenue recognition, it typically violates the realisation principle by booking revenues before all linked earning activities are finished.

* When determining whether the revenues booked by a customer are genuine, auditors pay special attention to the realisation principle.