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More lessons in revenue recognition—review of recent SEC enforcement actions
Author(s) -
Plunkett Linda M.,
Rouse Robert W.,
Herring Rebecca B.
Publication year - 1998
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.3970090209
Subject(s) - revenue recognition , revenue , enforcement , earnings , business , order (exchange) , accounting , cash , finance , law , accounting information system , financial accounting , political science
Generally accepted accounting principles (GAAP) advise that revenue should not be recognized until an exchange has occurred, the earnings process is complete, and the collection of the sale is reasonably assured. These conditions are normally satisfied when products are exchanged for cash (or claims to cash) and when the entity has substantially satisfied its obligations in order to be entitled to the benefits. Generally, a transfer of risks and rewards has to occur in order to effect an exchange for the revenue recognition.