[amp_mcq option1=”when purchase order is received from the purchaser” option2=”when goods are delivered to the purchaser” option3=”when the title of the goods has been transferred to the purchaser” option4=”when cash is received from the purchaser” correct=”option3″]<\/p>\n
The correct answer is: C. when the title of the goods has been transferred to the purchaser.<\/p>\n
Revenue recognition is the process of accounting for revenue in the financial statements of a company. The revenue recognition concept states that revenue should be recognized when it is realized or realizable and earned. Realization means that the goods or services have been transferred to the customer and the customer has accepted them. Earning means that the company has substantially completed the earning process and is entitled to the revenue.<\/p>\n
In the case of a sale of goods, the title of the goods is transferred to the customer when the goods are delivered. This is because the customer now has the right to possess and use the goods. The customer also has the risk of loss of the goods. Therefore, the company is entitled to the revenue when the goods are delivered.<\/p>\n
The other options are incorrect because they do not meet the criteria for revenue recognition. A purchase order is not sufficient to transfer title of the goods to the customer. Goods are not considered to be delivered until they are in the possession of the customer. Cash is not received until after the goods have been delivered and the title has been transferred.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”when purchase order is received from the purchaser” option2=”when goods are delivered to the purchaser” option3=”when the title of the goods has been transferred to the purchaser” option4=”when cash is received from the purchaser” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-51397","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n