Question

When using modified accrual accounting, revenues should be recognized when measurable and available to finance expenditures of the current period. True of False

Answer 1

Answer:

False.

Explanation:

The revenue recognition principle states that revenue should be recognized and recorded when it is realized or realizable and when it is earned. In other words, companies shouldn’t wait until revenue is actually collected to record it in their books.

Revenue should be recorded when the business has earned the revenue even it has not been paid by customers to finance expenditures