Question

Recognition of revenue in accrual accounting requires: (A) that cash be received.(B) only that a product be delivered or a service be performed.(C) only that the amount of cash to be received from the sale of a product or service be known.(D) that the revenue be realized or realizable, and earned.

Answer 1

(D) That the revenue be realized or realizable, and earned

Step-by-step explanation:

The accrual basis of accounting is the accounting method where the revenues are recorded and recognized when they are earned not when the cash for these revenues is received.

It is necessary because every revenue or every expense must be recognized in the period they occurred, it means we have to match revenues with expenses in the Income Statement.

The opposite of this is the cash method, which means that revenues and expenses are recognized when they are received or paid.

Hope it helps