Which situation qualifies as an exception to recognizing revenue?

In accounting, revenue recognition typically follows the principle that revenue is earned when goods or services are delivered or performed. However, there are specific situations where certain transactions do not qualify as revenue under the generally accepted accounting principles (GAAP).

Capital contributions from the owner do not qualify as revenue because they are not earned through the primary operations of the business, such as selling goods or providing services. Instead, these contributions represent investments made by the owner into the business. They increase equity but are not considered revenue generated from business activities. Essentially, capital contributions reflect the owner's support of the business rather than income earned from its operations.

This understanding reinforces the distinction between revenue and other types of funds entering a business, which is crucial for accurate financial reporting. The other options involve situations where revenue is either generated through business activities or involves accruing income, both of which are fundamental to the revenue recognition principle.