Realisation: Difference between revisions
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'Realisation' refers to the conversion of assets, profits or losses into cash. | 'Realisation' refers to the conversion of assets, profits or losses into cash. | ||
Realisation can occur either on the receipt or payment of cash, or at an earlier time when such receipt or payment of cash becomes | Realisation can occur either on the receipt or payment of cash, or at an earlier time when such receipt or payment of cash becomes virtually certain. | ||
Generally accepted accounting practice allows the [[recognition]] of income and and assets only when their realisation in the form of cash, or other assets that are readily realisable, can be assessed with reasonable certainty. | |||
The concept of realisation arose for the protection of the creditors of companies, to ensure that sufficient cash was available to distribute profits without a company or other entity becoming insolvent. | |||
Revision as of 18:12, 4 August 2015
'Realisation' refers to the conversion of assets, profits or losses into cash.
Realisation can occur either on the receipt or payment of cash, or at an earlier time when such receipt or payment of cash becomes virtually certain.
Generally accepted accounting practice allows the recognition of income and and assets only when their realisation in the form of cash, or other assets that are readily realisable, can be assessed with reasonable certainty.
The concept of realisation arose for the protection of the creditors of companies, to ensure that sufficient cash was available to distribute profits without a company or other entity becoming insolvent.
