REALIZATION PRINCIPLE Definition

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REALIZATION PRINCIPLE is that revenue should be recognized at the time goods is sold and services are rendered.

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IMPAIRMENT OF VALUE is the permanent decline in the value of an asset. The entry is to debit the loss account and credit the asset for the loss in utility. See also FRS 11.

NET 10, 30, etc. usually refers to payment terms on an invoice, e.g. Net 10 2%, 30, would mean that if a purchaser pays the invoice within 10 days a 2% reduction in invoice amount may be enjoyed, but full invoice amount is due within 30 days.

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