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Recognition of Revenue
24 Minute Accounting

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Module 1 | 24 minute Accounting | |
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Unit 1 | 24 Minute Accounting Pretest | |
Unit 2 | 24 minute Accounting Course Overview | |
Unit 3 | Accounting Department Structure | |
Unit 4 | Which Accounting System to Use? | |
Unit 5 | Accounting Concepts | |
Unit 6 | Double Entry Principle | |
Unit 7 | Accounting Cycle | |
Unit 8 | Chart of Accounts | |
Unit 9 | Recognition of Revenue | |
Unit 10 | Accounting for Inventories | |
Unit 11 | Accounting for Fixed Assets | |
Unit 12 | Income Statement | |
Unit 13 | Balance Sheet | |
Unit 14 | Auditing for your Business | |
Unit 15 | 24 minute Accounting Posttest |
Survey Questions
Hi, in this video you will learn how to record (or recognize) revenue in your accounts.
Depending on the type of business that you are operating, there is a different method available to you to use in recognizing revenue.
Remember, as per accrual accounting, revenue is only recognized once it has been earned. We do not want to manipulate our records to show a ‘Rosier picture today only to be proven wrong in the future.
There are four (4) types of transactions where Recognition of revenue takes place:
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Sale of Inventory – Once inventory has been shipped to / or delivered to your clients, then you can recognize this as the date of sale and invoice your client accordingly.
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Services Rendered – Revenues from rendering services are recognized when services are completed and billed. Depending on the agreement with your client, you may be able to partially invoice them at different stages of the contract / project, whereby you only invoice for the work completed.
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Use of Company Assets – Revenue from permission to use company's assets (e.g. interests for using money, rent for using fixed assets, and royalties for using intangible assets) is recognized as time passes or as assets are used
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Sale of Other Assets – Revenue from selling an asset other than inventory is recognized at the point of sale, when it takes place. For example, if machinery is sold, the funds received (Cash or other assets) are recorded as revenue earned.