revenue recognition criteria

Revenue recognition criteria are the standards used to determine when a company can record sales as income. Essentially, revenue is recognized when the company has earned it and it’s reasonably certain they will receive payment. This typically means the goods or services have been delivered or performed, the price is fixed or determinable, and collection is probable. The goal is to match income with the period in which the related goods or services are provided, ensuring that financial statements accurately reflect the company's performance during that time.