Which principle requires that revenues be recorded when the earning process is complete?

The Revenue Recognition Principle is fundamental in accounting as it establishes the specific conditions under which income becomes recognized as revenue. According to this principle, revenue should be recorded when it is earned, which typically occurs when the earning process is substantially complete and the goods or services have been delivered to the customer. This principle ensures that income is reported in the financial statements in the period it is earned, providing a clearer picture of a company’s financial performance.

By adhering to this principle, businesses can accurately match revenue to the period during which it was earned, aligning with the overall objective of providing meaningful and transparent financial reporting. This approach helps in reflecting the actual business activity and economic reality, facilitating informed decision-making by users of the financial statements.