Which statement is TRUE regarding reimbursement grants?

The statement that is true regarding reimbursement grants includes the understanding that both revenue recognition cannot occur before appropriation by the grantor and it can occur before appropriation if legally authorized.

In general, reimbursement grants provide funding to organizations on the condition that they incur eligible expenses. The revenue recognition principle requires that revenue is recognized when it is both earned and realizable. In the context of reimbursement grants, this often means that revenue recognition is contingent upon the grantor appropriating the funds. Appropriation establishes the grantor's commitment to the funding, thereby allowing for official revenue recognition.

However, if there are specific legal frameworks or authorizations that allow for revenue recognition prior to appropriation, it can also be justified. This is particularly relevant in governmental accounting where legal authority might permit the recognition of anticipated revenues under certain conditions.

Thus, both statements can be true under different circumstances, making the combined answer of both statements the most comprehensive and accurate. This understanding emphasizes the nuanced nature of revenue recognition in the context of reimbursement grants.