Question

Deciding whether to record a sale when the order for services is received or when the services are performed is an example of

Answer 1

Answer:

recognition issue

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Answer 2

Deciding whether to record a sale when the order for services is received or when the services are performed is an example of a Recognition issue.

• Recognition is the recordation of a business transaction in an entity's accounting records.
• For example, a loss can be recognized on a lower cost or market analysis, thereby recording the loss in the accounting records. Or, a sale transaction is recognized by recording revenue in the accounting records.
• Revenue recognition is a generally accepted accounting principle (GAAP) that stipulates how and when revenue is to be recognized.
• The revenue recognition principle using accrual accounting requires that revenues are recognized when realized and earned not when cash is received.