![]() Recognizing revenue in this way allows the company’s financial statements to reflect the revenue as the work is completed. In that case, revenue will be recognized in increments over six months in a process known as amortization. However, suppose the landscaping company enters into a six-month contract to mow the lawn and is paid $1,200 in advance. ![]() Even if the landscapers don’t get paid for another month, they can recognize the revenue now. It states that revenue is only recorded when earned, not when the money is received.įor example, a landscaping company mows the lawn of a local church for $200. GAAP has historically used the revenue recognition principle.
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