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Module 1: Accounting issues

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Revenue realisation

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Accounting - Revenue realisation

Revenue realisation

The realisation assumption sets out the point of time at which revenue is
to be recognised. Generally, firms will recognise revenue at the point of
sale or for the provision of a service. For example, a car is sold by a car
dealer on 23 December and payment is on 15 January. The accounting periods
are for one calendar month. If revenue is recognised at the point of sale
then this revenue would be reported in the month of December. At the point
of cash the revenue would be reported in January.

In fact, there are four points at which revenue may be recognised.

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