Accounting- Income statement Name Institution Date Part I Revenue recognition Revenue recognition focuses on the timing and measurement of revenues, and transactions are identified as recording revenues and related expenses based on the revenue recognition basis (Gibson, 2010). Under the accrual basis, revenue is recognized when it is earned, and the income is matched with the expenses (Edwards, Hermanson, Ivancevich, & Pearlman, 2013). The revenue recognition approach recognizes all the earnings earned and expenses in the financial year, to provide a clearer picture of the company’s financial position. Proper revenue recognition reflects the profitability of a reporting entity, and stakeholders make decisions based on financial performance, and especially for the investors. Revenues increase net assets, and this is distinguished from other assets that do not generate net assets. The exchange of goods and services for the assets, which occur as part of business or core operations is considered revenues. Similarly, a loss that decreases the net assets a
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Finance Accounting Assignment: Product vs Period Expense