Wednesday, June 10, 2015

REVENUE RECOGNITION PRINCIPLE

The revenue recognition principle states that revenue should be recognized as well as recorded when it is realized or realizable and when it is earned. In other words, companies shouldn't wait until revenue is actually collected to record it in their books. Revenue should be recorded when the business has earned the revenue. This is a key concept in the accrual basis of accounting because revenue can be recorded without actually being received.

No comments:

Post a Comment