Incrus in the process of earning revenue
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Answer:
Revenue is the value of all sales of goods and services recognized by a company in a period . arrive at Operating Income, also sometimes referred to as Earnings Before Interest
According to the revenue recognition principle in accounting, revenue is recorded when the benefits and risks of ownership have transferred from seller to buyer, or when the delivery of services has been completed.
Notice that this definition doesn’t include anything about payment for goods/services actually being received. This is because companies often sell their products on credit to customers, meaning that they won’t receive payment until later.
When goods or services are sold on credit, they are recorded as revenue, but since cash payment is not received yet, the value is also recorded on the balance sheet as accounts receivable.
When cash payment is finally received later, there is no additional income recorded, but the cash balance goes up, and accounts receivable goes down.
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