Question

What are the 5 criteria for revenue recognition?

Answer 1

The five criteria for revenue recognition are:

• Identifying the contract with the business client.
• Identifying the performance obligation mentioned in the contract.
• Identifying the predetermined prices associated with the contract.
• Distributing the transaction price as mentioned in the contract.
• Recognising the revenue when the business delivers the obligations that are mentioned in the contract.

Also read:

• Average Revenue Formula
• Marginal Revenue Formula