{"id":23011,"date":"2021-08-19T13:54:43","date_gmt":"2021-08-19T13:54:43","guid":{"rendered":"https:\/\/businessyield.com\/?p=23011"},"modified":"2021-08-19T14:39:06","modified_gmt":"2021-08-19T14:39:06","slug":"revenue-recognition","status":"publish","type":"post","link":"https:\/\/businessyield.com\/accounting\/revenue-recognition\/","title":{"rendered":"Revenue Recognition: How GAAP & ASC 606 Works","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n
If your company employs accrual accounting, you should be familiar with and comprehend the revenue recognition principle, also known as the revenue principle.
Why not spend a few minutes learning more about the revenue recognition principle, ASC 606 principle and why it is crucial to your company?<\/p>\n\n\n\n
Revenue recognition is the process of determining when a company’s revenue has been earned.<\/p>\n\n\n\n
If your company employs the cash basis of accounting, it’s simple: you make revenue when cash enters your cash register or bank account. It is not the same for organizations that employ accrual accounting. Revenue is only recognized on an accrual basis when it is earned.<\/p>\n\n\n\n
One of the reasons we have Generally Accepted Accounting Principles<\/a> is to help us understand when to recognize revenue (GAAP). GAAP specifies when and how to recognize revenue, as well as how to present it on your income statements.<\/p>\n\n\n\n