Question

When should revenue be recognised? Are there exceptions to the general rule?

Answer 1

Explanation:

Revenue should be recognised when sales take place either in cash or credit and/or right to receive income from any source is established. Revenue is not recognised, in case, if the income or payment is received in advance or the payment is actually received from the debtors.

Answer 2

Revenue is generally recognized when the earning method is virtually complete and exchange has taken place.  This principle is called realization.

• According to the principle of realization, the Revenue is generally recognized when the earning method is virtually complete and exchange has taken place.  
• This concept describes that revenue is documented only when there is a transfer of goods or assets. The sale is comprehensive only when the title of goods is conceded to the buyer.