GAAP accounting revenue recognition is an important principle for any business to understand and practice. Put simply, the GAAP accounting revenue recognition principle states that a business must recognize and report a sale or exchange of goods or services at the time it occurs and not later. This information is then used for internal and external financial reporting purposes. This means that even if a customer has made payment but hasn’t yet taken possession of the item(s) purchased, businesses still have to recognize the associated revenue. By following GAAP accounting principles in regards to revenue recognition, companies are able to ensure accurate and reliable financial statements.