Lesson 3 Essay - ACC111 Lesson 3 Essay Write a 500-1,000-word essay describing the revenue recognition principle and the matching principle When is

Lesson 3 Essay - ACC111 Lesson 3 Essay Write a...

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ACC111 – Lesson 3 Essay Write a 500-1,000-word essay describing the revenue recognition principle and the matching principle. When is revenue recorded? When are expenses recorded? There are two basic principles that apply to accrual basis accounting. Those are the revenue recognition principle and the matching principle. There are about 10 accounting methods that are currently being used in the revenue recognition principle. The matching principle however is only for one which is the accrual method. Revenue recognition principle “requires companies to record revenue when it has been earned and determines the amount of revenue to record.” (Nobles, T., Mattison, B. & Matsumura, E. (2014). P. 136) So what that means is the company shouldn’t wait until the money is actually received to record the information in its books. Revenue needs to be recorded as soon as the business has earned the revenue. “ Revenues are realized or realizable when a company exchanges goods or services for cash or other assets. So if a company enters into a transaction to sell inventory to a

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