Question

What are the principles of revenue recognition?

Answer 1

The principles of revenue recognition are:

• Determining the customer’s contract.
• Determining the liabilities or obligations in the contract.
• Identifying the price of the contract.
• Apportioning the transaction’s price according to the obligation mentioned in the contract.
• Recognising the revenue when the obligations are met.

Also read:

• Average Revenue Formula
• Marginal Revenue Formula