First Faculty Advisor
Revenue; Recognition; GAAP; FASB; Accounting
Users of financial statements consider revenue to be a key indicator of financial performance. Thus, proper revenue recognition is important. This paper provides a discussion of revenue recognition principles and practices. A discussion is provided of the Financial Accounting Standards Board’s (FASB) conceptual framework as it applies to revenue recognition. In addition, a discussion is provided on SEC guidance and specific applications of revenue recognition. According to the FASB, there are over 200 pieces of “ad hoc” guidance for revenue recognition. Because of inconsistencies in this guidance, the FASB and the International Accounting Standards Board (IASB) have engaged in a project to create a single revenue-recognition standard. The current status of this project, which began in 2002, is analyzed in the final section of this paper.