Revenue Recognition Accounting Definition

The revenue recognition concept is part of accrual accounting meaning that when you create an invoice for your customer for goods or services the amount of that invoice is recorded as revenue at.

Revenue recognition accounting definition. The revenue recognition principle using accrual accounting. Revenue recognition is a generally accepted accounting principle gaap that determines the process and timing by which revenue is recorded and recognized as an item in the financial statements. According to the principle revenues are recognized when they are realized or realizable and are earned usually when goods are transferred or services rendered no matter when cash is received. Revenue recognition is a generally accepted accounting principle gaap that stipulates how and when revenue is to be recognized.

Revenue recognition is an accounting principle that outlines the specific conditions under which revenue sales revenue sales revenue is the income received by a company from its sales of goods or the provision of services. In accounting the terms sales and revenue can be and often are used interchangeably to mean the same thing. The revenue recognition principle is a cornerstone of accrual accounting together with the matching principle they both determine the accounting period in which revenues and expenses are recognized.