Recognition and Evaluation of the Revenue

Author:PhD Student Elena Emilia IORDACHE, PhD. Student Monica JULEAN

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Keywords:criteria of recognition; evaluation; income adjustment; income auditing; decisions

Abstract:
The profit and loss account, as part of the financial situations of an entity is the measure of its performance. Incomes as basic elements of the profit and loss account must be recognized when they are earned by the company and not when the cash is generated. \r\n\r\nIn order not to overestimate the amount of the incomes and of the result as well it is necessary to apply some generally accepted recognition criteria for establishing the moment when the income should be recognized and an adequate evaluation method for determining their size.\r\n\r\nIncomes are as well an important part of the work of an auditor when analyzing the financial situations of the entity for the issue of an audit opinion. \r\nThe auditor must chose the most appropriate audit procedures in order to obtain the insurance that the size of the incomes is the real one and not a size chosen to influence the investors decision.

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