Acc/291t: Principles Of Accounting Ii: Week 1 To 5 Discussion Posts

When do you think revenue would be recognized I would say that revenue should be recognized when it is earned, which is essentially when a product or service is provided thereby, marking an exchange of the product or service and the payment to be made. In the case of the construction company, revenue can be recognized after the construction work awarded to the construction company is completed. In the case of the fitness center, revenue is recognized once the membership subscription is paid by the member to the fitness center. When would the two revenue recognition criteria be met Looking at the two case scenarios above (the construction company and the fitness center), the revenue recognition criteria include realizable revenue and earned revenue. For the construction company revenue is earned, which is characterized by the completion of the construction work. In the case of the fitness center, revenue is realized or generated, which is after the subscription payment is made. What is the risk to users of financial statements if revenue is recognized too early One of the risks related to the users or consumers of financial statements is that revenue would be recognized when it is too early (Flood,2017).