英语翻译When a company agrees to perform a service or sell a pro

英语翻译
When a company agrees to perform a service or sell a product to a customer,it has
a performance obligation.When the company meets this performance obligation,
it recognizes revenue.The revenue recognition principle therefore requires that
companies recognize revenue in the accounting period in which the performance
obligation is satisfi ed.1 To illustrate,assume that Dave’s Dry Cleaning cleans cloth-
ing on June 30,but customers do not claim and pay for their clothes until the fi rst
week of July.Dave’s should record revenue in June when it performed the service
(satisfi es the performance obligation) rather than in July when it received the
cash.At June 30,Dave’s would report a receivable on its statement of fi nancial
position and revenue in its income statement for the service performed.
EXPENSE RECOGNITION PRINCIPLE
Accountants follow a simple rule in recognizing expenses:“Let the expenses follow
the revenues.” Thus,expense recognition is tied to revenue recognition.In the dry
cleaning example,this means that Dave’s should report the salary expense incurred
in performing the June 30 cleaning service in the same period in which it recognizes
the service revenue.The critical issue in expense recognition is when the expense
makes its contribution to revenue.This may or may not be the same period in which
the expense is paid.If Dave’s does not pay the salary incurred on June 30 until July,
it would report salaries payable on its June 30 statement of fi nancial position.
This practice of expense recognition is referred to as the expense recogni-
tion principle (often referred to as the matching principle).It dictates that
efforts (expenses) be matched with results (revenues).Illustration 3-1 summarizes
the revenue and expense recognition principles.