Question

Define in your own words: The Revenue Principle or answer the question, when do we recognize revenue?

Answer 1

Under accrual basis of accounting ,Revenue should be recognised at the time it is earned irrespective of whether cash is received or not . (as soon as risk related to ownership of goods is transfered ,revenue should be recognised).HOwever if there is substaintial doubt as to recovery of revenue ,provision for doubtful debt should be made.

under cash basis of accounting ,revenue should be recognised at the time when cash is received irrespective of period in which sale is made .