Revenue Recognition
Definition
The accounting principle governing when revenue is recorded in the income statement. Under accrual accounting, revenue is recognised when it is earned, meaning when the service or product has been delivered or the performance obligation has been satisfied, regardless of when cash is received. Cash received before delivery is recorded as deferred revenue. Revenue recognition policy must be documented and applied consistently.
Common Misapplication
The most common misapplication is recognising annual subscription revenue in full at the point of payment rather than spreading recognition over the subscription period. An annual subscription of twelve thousand pounds paid in January is recognised as one thousand pounds per month over twelve months, not as twelve thousand pounds in January.
FFI Standard Reference
This term is defined and applied in Book 1, Section 1.4: The Accounting Integrity Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Revenue Recognition. https://ffistandard.org/glossary/revenue-recognition/. 2026.