In revenue recognition, which factor most directly indicates that control has transferred to the customer?

• A. The contract has been signed.
• B. The seller has control rights and the customer has not yet accepted the goods.
• C. The product is shipped.
• D. The customer has the ability to direct the use of the good or service and obtain substantially all its benefits.

Answer: (C)

Control is about who can direct the use of the asset and obtain its remaining benefits, and when that power passes, revenue can be recognized. Shipping the product often marks the point where control transfers because, under typical terms (such as passing title and risk at shipment), the buyer gains the ability to use the goods and receive their benefits and the seller has no remaining significant obligations.

While the other factors describe aspects of the arrangement, shipping is the observable event that commonly signals the transfer of control to the customer, satisfying the seller’s performance obligation under revenue recognition.