Rick Marsh, a lawyer, accepts a legal engagement in March, performs the work in April, and is...
Question:
Rick Marsh, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May.
If Marsh's law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why?
Revenue:
The economic benefit derived after performing the work for the clients is referred to as revenue. There are specific requirements related to the recognition of the revenue by the provider who may use the cash or the accrual concept.
Answer and Explanation:
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What is Revenue Recognition? - Principles, Process & Examples
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Chapter 7 / Lesson 2
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Revenue recognition states that revenue is recorded when it is realized, or realizable and earned, as opposed to received. Learn about the principles and process of revenue recognition with examples of recognition criteria before exploring some exceptions to the rule.
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