[amp_mcq option1=”Long-term construction contracts” option2=”Electricity generation and distribution” option3=”Shipping companies” option4=”Railways” correct=”option1″]<\/p>\n
The correct answer is: A. Long-term construction contracts<\/strong><\/p>\n The realization principle of accounting states that revenue should be recognized when it is realized or realizable, and expenses should be recognized when they are incurred. This principle is based on the idea that revenue should be matched with expenses in the period in which it is earned.<\/p>\n Long-term construction contracts are often not completed in the same accounting period in which they are started. In these cases, the realization principle requires that revenue be recognized over the period of the contract, rather than all at once when the contract is completed. This is because the revenue is not considered to be realized until the contract is completed.<\/p>\n The other options are all examples of businesses that typically recognize revenue when it is earned. For example, electricity generation and distribution companies recognize revenue when they sell electricity to their customers. Shipping companies recognize revenue when they deliver goods to their customers. Railways recognize revenue when they transport passengers or goods.<\/p>\n In conclusion, the realization principle of accounting does not apply to long-term construction contracts because revenue is not considered to be realized until the contract is completed.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Long-term construction contracts” option2=”Electricity generation and distribution” option3=”Shipping companies” option4=”Railways” correct=”option1″]<\/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-55414","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n