Revenue Recognition Standards

Revenue recognition standards are guidelines that dictate when and how businesses can record their income in financial statements. Essentially, they ensure that revenue is recognized in a way that accurately reflects a company’s financial performance during a specific period. The standards help businesses determine the right moment to report sales—usually when the goods or services are delivered, not when the cash is received. This approach provides a clearer picture of a company’s financial health and helps investors and stakeholders assess its performance over time.