Revenue Is Recorded When The Product Is Delivered

Revenue from selling an asset other than inventory is recognized at the point of sale when it takes place.

Revenue is recorded when the product is delivered. Revenue versus cash timing. Accrued revenue or accrued assets is an asset such as proceeds from delivery of goods or services. The revenue recognized is a proportion or the product of the percentage of revenue earned and cash collected. Companies don t need to wait until payment is collected to record it as revenue.

This is one of the most important components of the revenue recognition principle which is that revenue is recognized and recorded when services are rendered or the product delivered. Income is earned at time of delivery with the related revenue item recognized as accrued revenue. The installment sales method recognizes income after a sale or delivery is made. Last but not least revenue can also be recorded after delivery of the product or service but before payment is received.

This is a key concept in accrual basis accounting and usually applies to service based businesses like consultancies. When a company provides payment terms to sell its products or services the money owed by its customers is recorded as an asset called.