Accounting Objective Question:

Which statement accurately describes the significance of the Realization Principle in revenue recognition and its guidance for accountants?

A$)$ The Realization Principle dictates that revenue should be recognized when cash is received, ensuring accurate financial reporting.

B$)$ The Realization Principle suggests recognizing revenue when it is earned and realized or realizable, irrespective of cash receipt timing.

C$)$ The Realization Principle emphasizes recognizing revenue only after all expenses have been accounted for, promoting accuracy in financial reporting.

D$)$ The Realization Principle allows companies to recognize revenue whenever they deliver goods or services, ensuring timeliness in financial reporting.