... characteristics that permit reliable measurement? * Relevance - Will it make a difference to the decision maker? * Reliability - Is it a faithful representation? These questions and thoughts, in the recognition processes should be followed when determining revenue and expense recognition. This sets in place the foundation for the revenue recognition principle. Revenue The FASB defines revenues as "inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations" (FASB, 1985, para. 78). Realization means that the product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash or claims to cash. Thus the expectation that the product or service provided by the firm will result in a cash receipt has been ...

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