Question

Explain in details GAAP Rules for the accounts in the Revenue Business Process.

Answer 1

Fenerally Accepted Accounting Principles also called GAAP or US GAP, is the accounting standard adopted by the US Securities and Exchange Commission. The Financial Accounting Standards Board (FASB) has published US GAAP.

REVENUE RECOGNITION : Revenue recognition is an accounting principlr under GAAP that determines the specific conditions under which revenue is rcognized or accounted for. Generally, revenue is recognized only when a specific critical event has occured and the amount of revenue is measurable.

REVENUE are recognized when realized or realizable and earned

REVENUES are realized when products are exchanged for cash or claims to cash.

REVENUES are realiizable when related assets received are readily convertible to cash or claims to cash

REVENUES are earned when the products are delivered or services are performed.

RECOGNITION is the process of recording an item in the financial statements

REALIZATION is the process of converting non cash resources into cash.

Revenues are inflow of assets or settlement of liabilities (or both) from activities of the entity's central operatons

Gains are increase in net assets from peripheral or incidental transactions of an entity.