What is revenue recognition?

Recognition recognition is the methodology of accounting, which is used to identify specific circumstances that the income is recognized as income with the recipient's accounting records. This principle or methodology is considered one of the generally recognized accounting principles that many businesses and other organizations use to maintain their accounting records accurate and current. This recognition of income that has become income usually requires the occurrence of a particular event that results in income to measure and record them in accounting books, so it is identified as income.

For many companies, revenue is recognized when the payment is received from the customer. Until now, the company filled in an order for goods or services placed by the customer and either supplied the products or processed the order and arranged a shipment of products to the customer. In return, the customer will pay for the order. By publishing this payment to the receivables on receivables in accounting record records, the company recognized the acceptance of these PRoma and now counts it as income.

There are differences on this basic model of income recognition. The Company may decide to use the date on which the order is placed, or the date on which the bill for the order is generated as a key event that leads to recognition. For businesses where the customer's return is somewhat high, it may be a key event for the expiry of the period when the customer can actually return these products rather than the date of the invoice, or the date on which the payment is received. Each of these approaches is considered viable and can be used if the company maintains a consistent approach to reducing income because it concerns all its sales activities.

Although there are several questions about ethics of adjusting income recognition so that investors or the general public can introduce a more positive image, the fact is that the process of performing this adaptation is relativelyeasy. For example, if the company usually recognizes income when payment is tied and currently has a large number of outstanding customer invoices, the company may decide to change how it recognizes revenue. In this scenario, instead of recognizing income, if presented by customers, the company decides to recognize the income from the data that invoices were ready. The final result is that business data on higher sales and income than could be possible.