Question

What two criteria must ordinarily be met for revenue to be recognized? When does a company usually recognize revenue?

Answer 1

The basic criteria to recognise revenue is transfer of goods or services whether cash received immediately or not does not matter, we can receive cash later on at present the transfer can be done on credit basis.

Earlier when cash system was in progress only on receipt of cash is the criteria.

Now transfer of goods or service is main criteria and bill generation to identify to whom the goods or services ware transferd is the secondary criteria.

In recent times this system has further developed to transaction through online exchange of money online had paved for a new system in accounting.