What is Income? 4 Revenue Recognition Rules You Love to Break (but shouldn’t)!

It seems to go against the grain of strict accounting rules, but it is true nonetheless: How you organize your financial statements is entirely up to you.  It’s a freedom that can help you better understand your business — so long as you tread carefully.

Nowhere is this freedom more important, and more often abused, than in the “Income” section of your P&L. What you consider income and when you recognize it (called revenue recognition) are key to a good understanding of your business.  Do it wrong and you’ll not only fool yourself about your income, but you could get cross-ways with the IRS.  Do it right and it will open your eyes to opportunities for new customers and new profits.

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