Research Paper Help on Revenue Recognition


Revenues are
recognized through standards, such as international accounting standard board
and financial accounting standard board. Revenue in this case is realized
through the following process. The first step is to identify possible contracts
with potential customers. This is where customers who are potentially capable
and willing to enter into a contract show some interest. The second step is to ensure
that separate obligations are identified. The business enterprise is specific
about the needs it aspires to solve. The third step is to ascertain the price
involved in the delivery of the contract. The forth step is to apportion each
obligation with its own price so that a person is in a position to approximate
the overall price. Lastly, revenue is recognized after performing every
obligation satisfactorily.

Contacts are
important in revenue recognition because they involve different parts. When a
particular step in the contract is completed, the organization recognizes
revenue. This means that revenue will not be realized prior to the completion
of an obligation within a contract (Beil, 2013). The company is in a position to determine
the cost involved in each step by equating equivalent share. Each step is
valued according to the associated benefit it contributes to the contract. An
asset is defined as the activity or an obligation that earns revenue to the
organization. This means that the five steps will help identify an activity as
either an asset or a liability. On the other hand, a liability is what an
organization owes to its creditors. In cases where the organization earns money
before it delivers services or goods, it is considered a liability to the
company because it owes some obligations to the customers to be performed.


Beil, F. J. (2013). Revenue
recognition: Principles and practices
. New York, N.Y.] (222 East 46th
Street: Business Expert Press.

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