3 How should revenue be determined or measured?

In order to compile an entity’s trading and profit and loss account, it is necessary to distinguish between capital and revenue items. In practice, this is not always easy and a great deal of individual discretion may be required. Furthermore, even if a revenue item can be recognized fairly easily it is not always clear to which accounting period it relates. This article emphasizes the importance of disclosing what criteria have been used in determining the ‘revenue’ for a particular accounting period.