Under accrual accounting, revenue is recognized when:

A Cash is received

B It is earned and realizable, regardless of when cash is received

C The invoice is sent

D The fiscal year ends

✓ Correct Answer: Option B

Accrual accounting recognizes revenue when earned (performance obligation satisfied), not when cash is received.

💡 Why is B) the correct answer?

The correct answer to the question "Under accrual accounting, revenue is recognized when:" is Option B: It is earned and realizable, regardless of when cash is received.

The other options — A) Cash is received, C) The invoice is sent, D) The fiscal year ends — are incorrect for this CPA Exam Prep question. As explained above: Accrual accounting recognizes revenue when earned (performance obligation satisfied), not when cash is received.

📚 About This CPA Exam Prep Practice Question

This 2-level CPA Exam Prep question from the Financial Accounting (FAR) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

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Under accrual accounting, revenue is recognized when:

✓ Correct Answer: Option B

📚 About This CPA Exam Prep Practice Question

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