Revenue recognition is one of the key issues accountants have to deal with on a regular basis. It’s usually straightforward for a merchandiser, but when should revenue be recognized when the company accepts a contract that will take several months to several years to complete? In this article, we’ll discuss two methods for recognizing revenue from contracts.

Many sales transactions are paid for immediately by the customer, and are relatively straightforward to account for. On the other hand, a sales contract might call for annual payments. The question then becomes, when should revenue be recognized? There are three general ways to account for the sale revenue, and the method used depends on the reliability of future cash payments.

“Closing the books” is an important process in the life cycle of any company. It is necessary for both reporting and tax purposes and helps management assess the health and well-being of the business. In this article, we will look at why the process is necessary and discuss the role played by the Income Summary account at the end of a fiscal year.

Learn about non-operating revenues and expenses.

Learn about differences among revenue, gross profit, profit, income gain, and net income.

Learn about revenue recognition in situations when a right of product return exists.

Accounting guide about consigned goods; definitions of consignment, consignee, consignor; examples of consignment journal entries; consignment benefits, risks and controls.

Explanation of accounting for customer returns, sales and return allowances, purchase allowances, cash refunds and store credits.