From the course: Running a Profitable Business: Revenue Recognition
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Satisfying contractual obligations to customers
From the course: Running a Profitable Business: Revenue Recognition
Satisfying contractual obligations to customers
- Online I found the following definitions of the word revenue: Amount of money regularly coming in, Money that is made or paid to a business or an organization, Income that a company receives from its normal business activities, usually from the sale of goods and services to customers, Amount of money a company earns through the sale of goods or services, and rents, and other sources. Lots of people have their opinion about what the word revenue means. But revenue is an accounting word, so we, the accountants of the world, get to define what it means. Let's consider each one of these possible definitions of the word revenue. First, amount of cash collected by the seller from the buyers. This is okay, I guess, but if we use this definition of revenue, then we are giving up on using the income statement as a measure of economic performance. As we have already discussed, in several different contexts, the flow of cash does not match the pattern of economic activity, performed by a…
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