What do u mean by revenue recognistion

Question

Accepted Answer

Revenue recognition refers to the process of accounting for and reporting revenue earned by a company.

Revenue recognition is a critical aspect of financial reporting and is governed by accounting standards such as GAAP and IFRS.
It involves determining when revenue should be recognized, how much revenue should be recognized, and in which period it should be recognized.
Revenue can be recognized at different points in time depending on the nature of the transaction, such as when goods are delivered or services are rendered.
For example, a software company may recognize revenue when a customer signs a contract, but a construction company may recognize revenue when a project is completed.
Improper revenue recognition can lead to financial misstatements and can have serious consequences for a company, including legal and regulatory penalties.

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