There are typically three important guidelines for revenue recognition. (Taub, 2011) Revenue is recognized when earned: In this case the earnings process must be fully complete
Revenue Recognition Revenue is a mode of taxation that is charged by the central governing authority for the purpose of generation income for the government. Revenue is charged on various items from the companies or on businesses that are conducted within the jurisdiction of the ruling authority (Bragg, 2010)
The period expenses are the entire costs which are not counted as product costs. These are such as the revenues that are as result of services offering companies (Sondhi, Ashwinpaul & Taub, 2008)
Determining the expenses for the products before being sold would be one factor of revenue recognition that would support and make sure the company is selling the product for a price that is not only competitive in the markets but also profitable for the company, covering expenses involved in completing the product from start to finish. Once the product is sold and compared to the expenses involved or matched with these expenses, then these amounts would be recorded for accounting purposes (Friedlob and Plewa, 1996)