Revenue represents the gross inflow of (net) assets  resulting from the profit-directed activities of the firm.

 APB Statement No. 4, paragraph 134, defines revenue as gross increases in assets or gross decreases in liabilities recognized and measured in conformity with generally accepted accounting principles that result from the profit directed activities of an enterprise that can change owners' equity.

Revenue recognition must be accompanied by an increase in the net assets of the firm (assets must increase, or liabilities must decrease as a result of revenues being realized).

According to Concepts Statement No. 6, paragraph 79, revenues represent actual or expected cash inflows that have or will occur as a result of the entity's ongoing major or central operations.

Revenue recognition: Revenue is generally recognized when (1) the earnings process complete, and (2) an exchange transaction has taken place.

• Should the economic substance of the event take precedence over the legal form of the transaction?
• Is the collectibility of the receivable from the sale reasonably certain?
• Have the risks and benefits of ownership been transferred to the buyer?

• prior to production
• during production
• completion of production
• in the period of the sale

• installment sales method

• cost recovery method

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