When should revenue be recognized according to accounting rules?

Revenue should be recognized at the point of delivery of goods or services because this aligns with the revenue recognition principle outlined in accounting standards. This principle states that revenue is recognized when it is earned and realizable, which typically occurs when the seller has fulfilled their obligation to deliver the product or service to the customer.

This point of delivery indicates that the company has completed its performance obligation, and the customer has gained access to the benefits of the product or service. Recognizing revenue at this point ensures that the financial statements accurately reflect the company’s economic activity and performance during the accounting period.

The other options do not align with this principle. Recognizing revenue at the time of cash receipt does not consider whether goods or services were actually delivered. Recognizing it upon completion of a sale could be ambiguous without clarification on what defines "completion." Recognizing revenue when expenses are incurred does not relate directly to earning revenue or delivering goods/services, as it fails to match revenues with the expenses directly related to generating that revenue.