When should i record revenue? After it has been earned—and not before. In most cases, revenue is earned when you have delivered a good or service to your customer.
You have done everything required to earn the revenue by transferring the good or service to the customer – NOT NECESSARILY WHEN CASH CHANGES HANDS. So you have sold goods worth N1million, it is now a sale on account i.e Customer is owing you (an Accrual method according to Generally accepted accounting principles). The cash-basis method does not record the sale because you received no cash. You may be thinking, “Let’s wait until we collect cash and then record the sale. After all, we pay the bills with cash, so ignore transactions that don’t affect cash. The cash method may also continue to be appropriate for a small, cash-based business or a small service company. ” What’s wrong with this argument? THIS TAKES US TO ANOTHER TOPIC. Reach out to us now😊 Meanwhile something BIG is coming 😀😁😆. Hmmn.
#sales #lekki #accounting101
Lekki Phase 1.