According to this concept the recognition is made for both revenues as well as expences. It means in the realization concept the recognition of revenue was mainly considered and in this concept the recognition of expences is also considered. It is proper to record all the trancation in the books whether cash settelement is need or not i.e.., an accountant must treat as revenues all those items for whichthere is a legal right to receive although cash might not have been received from them.(IF REVENUE IS EARNED, BUT NOT RECEIVED STILL IT WILL BE CONSIDERED AS REVENUE BUT IF REVENUE IS NOT EARNED BUT RECEIVED IN ADVANCE IT WILL BE A LIABILITY), Similarly ( IF SOME PAYMENT IS MADE, BUT IF EXPENCE IS NOT INCURRED THE PAYMENT MADE IN ADVANCE SHOULD BE TREATED AS AN ASSET AND NOT AS AN EXPENCE) MADE IN ADVANCE
