Accounting · Accounting Principles

Assertion: The Realization Principle of accounting stipulates that revenue should be recognized in the books of accounts only when it is legally earned and there is reasonable certainty of its collection, regardless of when the cash is actually received. Reason: The Accrual Basis of accounting is a fundamental accounting assumption where transactions are recorded at the time they occur, which ensures that the financial statements reflect the income and expenses attributable to a specific period, thereby following the matching principle.