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Improper revenue recognition can be a problem in valuing private companies. True or False

Improper revenue recognition can be a problem in valuing private companies.

True or False

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Answer #1

True

Improper revenue recognition can be a problem in valuing private companies and public companies as well.

Revenue recognition is the most important aspect in accounting.

revenue should not be recognized until it is realized or realizable and earned. Before revenue is recognized, the following criteria must be met: persuasive evidence of an arrangement must exist; delivery must have occurred or services been rendered; the seller’s price to the buyer must be fixed or determinable; and collectability should be reasonably assured.

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