Question

Explain Revenue Recognition and a Verifiable Objective concept of accounting.

Answer 1

Revenue Recognition: According to this principle income is treated as being earned on the date on which it is realized,i.e., the date on which goods or services are transferred to the customers. Since this exchange of goods or services may be for cash or on credit, it is not important whether cash has actually been received or not.

Verifiable Objective: This principle justify the significance of verifiable documents supporting various transactions. According to it, each transaction should be supported by Objective evidence like Voucher. Objective evidence, here, means evidence free from bias of the accountant.