Accounting Recognition of Sales Revenue Research Proposal

Accounting Recognition of Sales Revenue - Research plan ExampleGenerally Accepted Accounting Principal (GAAP) with regard to recognition of gross is covered by FASB Statement of Financial Accounting Concepts No.5. As per paragraph 83 of said SFAC No.5 , revenue recognition surrender consideration of two factors, a) being realized and realizable, and b) being earned, with some cartridge clip one and sometimes the early(a) being the most important consideration. Both criteria are required to be accomplished in the lead the revenue is recognized. The revenue is treated as realized when cash is received for sale of product and revenue is termed as realizable when a promise to pay is received and that may be either verbal promise to pay or written in the shape of notes receivable. The second condition is that the revenue moldiness be earned. Revenue is treated as earned when enforceable ex turn takes place of considerations. That is to say deliveries of goods have been given and pro mise to pay has been received. Take the case of credit sales where goods have delivered at the time transaction was entered into. In such a transaction a verbal promise to pay has been created on acceptance of delivery by buyer. Accordingly it can be said that revenue has been earned at the time of occurrence of a verbal promise to pay. Again as per SFAC No.5 before recognition of a transaction four basic criteria namely, the arising of basic element of asset or liability or change in equity through such transaction, measurability, relevance, and reliability, are required to be fulfilled.