PRC-1 · Chapter 4 · Question 41 of 100
A photography studio recognizes revenue as soon as the wedding albums are delivered to the client, even though the client has 30 days to pay. Which accounting concept does this scenario directly illustrate?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Realization / Accrual Concept
Explanation
The realization or accrual concept dictates that revenue is recognized when it is earned (e.g., when goods or services are delivered), regardless of when the physical cash changes hands.
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