Revenue Recognition

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Definition of 'Revenue Recognition'

An accounting principle under generally accepted accounting principles (GAAP) that determines the specific conditions under which income becomes realized as revenue. Generally, revenue is recognized only when a specific critical event has occurred and the amount of revenue is measurable.
Investopedia Says

Investopedia explains 'Revenue Recognition'

For most businesses, income is recognized as revenue whenever the company delivers or performs its product or service and receives payment for it. However, there are several situations in which exceptions may apply. For example, if a company's business has a very high rate of product returns, revenue should only be recognized after the return period expires.

Companies can sometimes play around with revenue recognition to make their financial figures look better. For example, if XYZ Corp. wants to hide the fact that it is having a bad year in sales, it may choose to recognize income that has not yet been collected as revenue in order to boost its sales revenue for the year.
 
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'Revenue Recognition'

  • CFA Level 1 Study Guide - Financial Statements - Revenue ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/revenue-recognition.asp
    Learn about revenue recognition and the importance of the matching principle.
    Includes calculations and principles of revenue recognition. ...

  • CFA Level 1 Study Guide - Financial Statements - Revenue ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/revenue-recognition-methods.asp
    A comprehensive look at the various methods of revenue recognition. ... 6.13 Accounting
    for Dividends; 6.14 Accounting for Equities; 6.15 Revenue Recognition; ...

  • CFA Level 1 Study Guide - Financial Statements - Revenue ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/revenue-recognition-cash-flows-ratios.asp
    ... Guide. This topic contrasts the two styles of revenue recognition by showing
    their impacts on cash flow and various financial ratios. ...

  • CFA Level 1 Study Guide - Financial Statements - Revenue ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/revenue-recognition-accounting-entries.asp
    Step by step examples showcasing how to apply revenue recognition to accounting
    entries. Illustrates two methods of revenue recognition. ...

  • New Accounting Rules To Accelerate Revenue Recognition

    http://stocks.investopedia.com/stock-analysis/2009/New-Accounting-Rules-To-Accelerate-Revenue-Recognition-AAPL-CSCO-WSTL1109.aspx
    An FASB accounting standards change will lead to accelerated revenue recognition
    for many companies, providing a much-needed boost during sluggish economic ...

  • Financial Statements: Revenue | Investopedia

    http://www.investopedia.com/university/financialstatements/financialstatements5.asp
    Individual investors can rarely detect bogus revenue schemes, but when it comes
    to revenue recognition, there are a few things we can do. ...

  • CFA Level 1 Study Guide - Macroeconomics - Components of Marginal ...

    http://www.investopedia.com/exam-guide/cfa-level-1/macroeconomics/marginal-product-revenue.asp
    ... 6.13 Accounting for Dividends; 6.14 Accounting for Equities; 6.15 Revenue
    Recognition; 6.16 Revenue Recognition Methods and Implications; ...

  • Creative Accounting: When It's Too Good To Be True

    http://www.investopedia.com/articles/trading/10/creative-accounting-too-good.asp
    ... Look at the Revenue Recognition The easiest way to detect premature revenues is
    to look at a company's revenue recognition policies found in their 10-Q or 10-K ...

  • When should a company recognize revenues on its books?

    http://www.investopedia.com/ask/answers/06/recognizingrevenues.asp
    ... of the goods. The revenue recognition process for the store is complete
    when the customer pays for the merchandise. If the customer ...

  • Financial Footnotes: Start Reading The Fine Print

    http://www.investopedia.com/articles/02/050102.asp
    ... The first deals with the accounting methods that a company chooses to formulate
    its financial information, such as revenue recognition policies. ...

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