👉 Revenue Recognition Principle (RRP) is a accounting standard that dictates when revenue should be recorded in financial statements. It states that revenue is recognized when it is earned and realizable, meaning the company has fulfilled its performance obligation to the customer. This typically occurs when goods are delivered or services are completed, and the revenue can be reliably measured. Factors like payment terms, contract conditions, and the nature of the transaction (e.g., subscription vs. one-time sale) influence when revenue is recognized, ensuring that financial reports accurately reflect the company's financial performance and position.
