Question

What are the four criteria for revenue recognition?

Answer 1

The criteria for revenue recognition is as follows:

1. Risk and rewards of the ownership has been duly transferred to the buyer from the seller.
2. The seller has no control over the goods once it is sold.
3. The collection of payment from goods and services is reasonably assured.
4. The cost of revenue can be measured reasonably.

Also read:

• Difference Between Capital Expenditure and Revenue Expenditure
• Difference Between Capital Reserve and Revenue Reserve
• GAAP Generally Accepted Accounting Principles
• Difference Between GAAP and IFRS

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