Question
Revenue should be recognized at the point of sale. Which
principle is applied here?ÂSolution
The Realization Principle states that revenue should be recognized (recorded) when it is realized or earned, and when it can be reasonably measured or reliably determined. In the context of a point of sale, revenue is considered realized when a company has completed the delivery of goods or services to the customer, and the customer has accepted those goods or services. This typically occurs at the point of sale when ownership transfers to the customer, and the seller has fulfilled its obligations.
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