According to the revenue recognition concept, in order to recognize revenue from a transaction, there are two things which should have occured, namely : -<br /><br />• Transaction should have been entered into;<br />• Right to receive the payment must be established.<br /><br />The revenue recognition event need not necessarily occur with the event of collection of cash. Once the above two factors are established, even if the cash is received at a later point in time, it does not make any difference to the recognition of revenue. The undermentioned video explains the concept of revenue recognition in detail.
