Which principle dictates that revenue should be recognized when the earnings process is complete?

The principle that dictates that revenue should be recognized when the earnings process is complete is the GAAP Realization principle. This principle is rooted in Generally Accepted Accounting Principles (GAAP) and establishes the timing for recognizing revenue, stating that revenue should only be recognized when it is earned, which occurs when the goods or services have been delivered and the associated risks and rewards have been transferred to the buyer.

Recognizing revenue at this point ensures that financial statements provide an accurate representation of a company's actual economic performance, reflecting the reality of completed transactions. This principle is important for maintaining the integrity of financial reporting and ensuring that stakeholders have a clear view of a company's financial health at any given time.

While the matching principle relates revenues to the expenses incurred to generate them in the same period, it does not specifically address the timing of revenue recognition itself. The consistency principle focuses on using the same accounting methods over time to enhance comparability, and the conservatism principle guides accountants to anticipate no profits but to anticipate all losses. These principles, while important, do not specifically determine when revenue should be recognized in relation to the completion of the earnings process.