Revenue and expense recognition Revenue and expense recognit

Solution

AS PER US GAAP REVENUE IS RECOGNISED WHEN BOTH OF THE FOLLOWING SATISFIED

a) REALIZED OR REALIZABLE AND - WHEN EXCHANGE FOR CASH OR CASH EQUIVALENT

b) EARNED I.E WHEN GOODS DELIVERED

EXPENSE RECOGNITION PRINCIPLE FOLLOW MATCHING PRINCIPLE I.E EXPENSE IS RECOGNISE IN SAME PERIOD IN WHICH REVENUE GENERATED BUT IN SOME CASES IT CAN ALSO BE RECOGNISE IMMDIEATLY WHEN IT OCCURS