No. Revenue is the money a company earns from the sale of its products and services. Cash flow is the net amount of cash being transferred into and out of a company.
Recording Accrued Revenue Accrued revenue is recorded in the financial statements by way of an adjusting journal entry. The accountant debits an asset account for accrued revenue which is reversed when the exact amount of revenue is actually collected, crediting accrued revenue.
Essentially, the revenue recognition principle means that companies' revenues are recognized when the service or product is considered delivered to the customer — not when the cash is received.
(Under the cash basis of accounting, revenues are not reported on the income statement until the cash is received.) Also under the accrual basis of accounting, expenses are reported on the income statement when they match up with the revenues being reported, or when a cost has no future benefit that can be measured.
Revenue is the income a company receives as a result of its business activities, typically through the sale of goods or services, rents, and other sources.
In bookkeeping, revenues are credits because revenues cause owner's equity or stockholders' equity to increase. Recall that the accounting equation, Assets = Liabilities + Owner's Equity, must always be in balance.
According to the principle, revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting – in contrast – revenues are recognized when cash is received no matter when goods or services are sold.
For services and long-term contracts, revenue should be recognized as earned when the work progresses and the amount of consideration (i.e., the amount that you will receive in payment) can be measured. Collection must be reasonably assured to recognize product or service revenue.
What is the Revenue Recognition Principle? The revenue recognition principle states that you should only record revenue when it has been earned, not when the related cash is collected. For example, a snow plowing service completes the plowing of a company's parking lot for its standard fee of $100.
Accrual basis accountingAccrual basis accounting Accrual accounting is a method of accounting where revenues and expenses are recorded when they are earned, regardless of when the money is actually received or paid. For example, you would record revenue when a project is complete, rather than when you get paid.
Total revenue is the sum of both operating and non-operating revenues while total expenses include those incurred by primary and secondary activities. Revenues are not receipts. Revenue is earned and reported on the income statement. Receipts (cash received or paid out) are not.
Under the accrual basis of accounting, revenues and expenses are recorded as soon as transactions occur. This process runs counter to the cash basis of accounting, where transactions are reported only when cash actually changes hands.