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Are You Using Generally Accepted Accounting Principles?

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There are many types of accounting methods that businesses may use and still follow the ‘Generally Accepted Accounting Principles.’ What differs in each is recognizing revenues and expenses. One of the most common ones that businesses rely on is called the percentage of completion method, also known as PoC.

In a nutshell, the PoC method recognizes a portion of revenue for a project, even if it has yet to complete. It’s a way of acknowledging that expenses have been incurred and the project has chugged along. Construction companies are a prime example of using the PoC method. It has also trickled its way into the tech sector too. Think about it: If a software company is developing something for someone, then they want to recognize part of the work and part of what it has cost them to complete the task.

What else do you need to know? This graphic explains it:

Click To Enlarge

Everything You Need to Know about the Percentage of Completion Method (PoC)

Via Salesforce

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