Revenue Recognition Principle

Steps:

• Identify the accounting principle: Revenue is earned when the seller fulfills its performance obligation.
• Analyze the scenario: William supplies goods on credit, so earning occurs upon transfer of control to James.
• Determine the trigger: Delivery of goods satisfies the obligation, not order acceptance or payment receipt.
• Conclude: Revenue is recognized at delivery under accrual accounting.

Why B is correct:

• Per the revenue recognition principle (IFRS 15/ASC 606), revenue is earned when control of goods transfers to the customer, which happens at delivery.

Why the others are wrong:

• A: Accepting the order creates a contract but does not fulfill the performance obligation.
• C: Receiving full payment reflects cash collection, not the earning event under accrual basis.
• D: First payment is merely a partial collection, not the point of revenue recognition.

Final answer: B