Basic Accounting Software

why do accounting principles...?

Why do generally accepted accounting principles require the application of the revenue recognition principle? a- Failure to apply the revenue recognition principle could lead to an overstatement of revenue. b-It is easy to apply the revenue recognition principle because revenue issues are always easy to identify and resolve. c- Recording revenue when cash is received is an objective application of the revenue recognition principle. d-Accounting software has made the revenue recognition easy to apply.

Public Comments

1. a Overstatement of revenue can be happen if there is a misleading revenue recognition in the case of deferral income, that is, when an asset (e.g. receivable, cash) is received, but should be recorded as liability not income because the related income (i.e. revenue) will be earned only after the job be done in the future.