Understanding Revenue Recognition under GAAP

In the context of financial reporting, the Generally Accepted Accounting Principles (GAAP) provide a framework for preparing financial statements. One of the key principles underlying GAAP is the 'recognition' principle. This principle outlines when revenues and expenses should be recognized in the financial statements. Consider the following scenarios based on this principle:

- A company sells goods on credit and recognizes the revenue at the point of sale.

- A contractor recognizes revenue based on the percentage of completion method for a long-term project.

- A company waits until cash is received before recognizing any sales revenue.

Based on the principles of GAAP, which of the following statements accurately reflects the revenue recognition principle?