Accounting concept?

Question

According to IAS18, when should revenue be recognised? And why do we need this concept?

Answer 1

Not real sure of the technical concept anymore.......I am soooo glad I'm done with college and am practicing now.

Anyway, we recognize revenue as it is earned. We need this concept so that we don't overstate earnings.

For example, you know that a customer will buy $1,000,000 in stuff from you three months from now. You don't put that on your income statement now, you don't really have that money. You will put that $1 million on your income statement in three months when it actually happens.