Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

Which of the following is NOT true about revenue?

Revenue is recorded only when cash is received from customers.

Revenue can result from the sale of goods or the provision of services.

Revenue is recognized when it is earned, regardless of when cash is received.

Revenue recognition follows the accrual basis of accounting.

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Verified step by step guidance

Understand the concept of revenue recognition: Revenue is recognized when it is earned, not necessarily when cash is received. This is a key principle of the accrual basis of accounting.

Review the accrual basis of accounting: Under this method, revenues and expenses are recorded when they are incurred, regardless of when cash is exchanged.

Analyze the provided statements: Identify which statements align with the accrual basis of accounting and the revenue recognition principle.

Focus on the statement 'Revenue is recorded only when cash is received from customers': This statement contradicts the accrual basis of accounting, as revenue can be recognized before cash is received if it has been earned.

Conclude that the statement 'Revenue is recorded only when cash is received from customers' is NOT true, as it does not align with the accrual basis of accounting or the revenue recognition principle.