Finance & Moneyadvanced
Revenue Recognition
Definition
The accounting rules for when you are allowed to record income as earned, which is when you deliver the product or service, not necessarily when the cash arrives.
Why it matters
Getting revenue recognition right keeps your accounts honest and comparable, especially with upfront annual payments that are really earned month by month.
Example
A customer pays £1,200 for a year upfront, but you recognise £100 of revenue each month as you deliver the service.
Related terms
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