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SSC Audit Tax Finance P-II QUESTION #6198
Question 1
The GAAP 'Realization Principle' requires that revenue be recognized when:
  • Cash is received in the bank.
  • The earning process is virtually complete.✔️
  • A contract is signed.
  • The fiscal year ends.
Correct Answer Explanation
Revenue is recognized when earned, usually at the time of sale, regardless of when cash is received [cite: 19].