What is the revenue recognition principle?
submitted by Warner Brandes

Smithtoon

It dictates that revenue should be recorded in the accounting records when it is earned and realizable, whenever the cash is actually received. This means that a company records revenue when the goods or services are delivered to the customer. The earning work is done, so it's recorded. The payment may not be made, but you recognize the revenue when you deliver the product or service.

willysimple

It's a rule in accounting that says you should record the income when you actually make the sale or provide the service, not necessarily when you get paid. So, if you deliver a product today, you recognize the revenue today, even if the customer pays later.

takeit

Basically, the revenue recognition principle means I count the money as income when I deliver the product or service, not when I get the check. It helps keep my books accurate and in line with accounting standards.

It makes sense, because if you don't record the revenue, you're not recording that you did your job. If the client hasn't paid, that's a separate matter.