Recognition of Income is recognized in the income statement when:

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Revenue recognition under accrual accounting happens when the entity has earned the revenue and the amount can be measured reliably, leading to an increase in assets (like accounts receivable) or a decrease in liabilities (like unearned revenue). This captures the idea that income is recognized when the entity has delivered value and the future inflow is probable and measurable.

The best choice states that the increase in future economic benefits has arisen and can be measured reliably, which aligns with recognizing revenue when performance has occurred and the related inflow can be quantified.

Cash receipts alone don’t determine revenue since income can be earned before cash is received. Merely an asset increasing in value isn’t revenue from operations. And revenue isn’t recognized just because it is probable; it must be earned and measurable, tied to the entity’s performance and the realization of benefits.