Revenue Recognition

*Q-1* There conditions usually be met before taxation enhancement is considered realized. 1. tax income experience a) gross is earned b) Revenue is realized 2. Revenue is earned a) Services b) Delivered 3. Expense Recognition Revenue recognition : Revenue recognition center recording some(prenominal) tax income in the accounts to show what a vexation has earned. Rules and regulations endure on how and when to recognize revenue, both in national statutes and in guidelines created by professional accounting organizations. Revenue recognition is an chief(prenominal) concept in accounting because misreporting revenue results in uncomely distortions to all of a businesss accounting statements. Revenue is the recognition of a financial transaction that occurs in normal business operations. Companies earn revenue by interchange goods and services to consumers or other businesses. Revenue is know differently under the aggregation and cash hind end methods of accounting. Under accrual accounting, revenue is recognized when transactions occur; cash primer accounting recognizes revenue when cash changes hands. 1 a) Revenue is earned :- One criteria for when revenue can be recognized in accrual basis accounting is when the revenue has been earned.

Earned means that either the goods clear been delivered and transferred to the ownership of the customer or that services have been rendered. At its basis, earned means that the economic transaction between the emptor and the seller is complete. 1 b) Revenue is realized :- The other criteria for when revenue can be recognized in accrual basis accounting is that the revenue must be realizable. Realizable means that thither is reason to believe that the amount will be paid while realized means that the revenue has been paid. Revenues from selling to a bankrupt business, for example, are not realizable because there is little assurance that payment will be authorized for the goods delivered. Revenue is earned :- Earned income is an... If you want to get a full essay, order it on our website: Ordercustompaper.com

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