Accounting for IGCSE & O level - Advanced Principles (Section 7 - No. 11)

Which of the following best describes the realization principle?

Recognizing revenue when cash is received.

Recognizing revenue when it is earned and when goods or services are provided.

Recognizing revenue when a contract is signed.

Recognizing revenue when an invoice is issued.

The realization principle states that revenue should be recognized when it is earned and when goods or services are provided.