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This is a form of cash basis accounting and is most commonly found in installment sales.
Revenue recognition principle of accounting. Revenue recognition is a generally accepted accounting principle gaap that stipulates how and when revenue is to be recognized. To summarize the above discussion we can say that the revenue is recognized when the entity is entitled to it i e earned provided that it is recoverable i e realized or realizable not at the time. In accounting the terms sales and revenue can be and often are used interchangeably to mean the same thing. The last exception to the revenue recognition principle is companies that recognize revenue when the cash is actually received.
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