Which of the following is a revenue recognition criterion under GAAP?

• A. The customer has signed a contract
• B. Cash has been collected
• C. Delivery has occurred or services have been rendered
• D. The seller's cost basis is known

Answer: (C)

Under GAAP, revenue is recognized when the seller has satisfied its performance obligation—typically when control of the goods passes to the customer or the service is performed. Delivery has occurred or services have been rendered demonstrates that the earnings process is complete, so recognizing revenue at that point aligns with earning it. A signed contract by itself doesn’t mean revenue is earned, since obligations may remain unfulfilled. Cash collection isn’t required for revenue recognition in accrual accounting—revenue can be recognized before or after cash is received, depending on collectability. Knowing the seller’s cost basis doesn’t determine when revenue is earned; it affects profit, not the timing of revenue. So, delivery has occurred or services have been rendered is the correct criterion.