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Gaap Revenue Recognition Rules

oboloo Glossary

Gaap Revenue Recognition Rules

The Generally Accepted Accounting Principles (GAAP) Revenue Recognition Rules are accounting guidelines that govern the recognition of revenue for public and private companies. These rules require businesses to record their revenue when it has been earned and when it is probable that the economic benefits associated with it will be realized. In order to meet the criteria set forth by GAAP, a company must have an agreement in place between itself and its customer, have control over the performance related to the sale of goods or services, and be able to measure the transaction reliably. It is also important for a company to ensure that it can collect payment for the goods or services provided and be able to demonstrate its ability to deliver on this commitment. By adhering to these standards, companies can provide financial reports of accurate and reliable information to their investors and stakeholders.

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