The realization concept in accounting is a principle that determines when revenue is recognized during the selling and earning process. It is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively. The realization principle is most often violated when a company wants to accelerate the recognition of revenue and books revenues in advance of all related earning activities being completed. The realization principle is a revenue recognition principle that states that the income or revenue is recognized only when earned. The realization principle deals with revenue recognition, i.e., profit should be realized when goods are transferred or risk and rewards are transferred. The realization principle dictates that revenue should only be realized when goods have been delivered or services have been rendered and there is a reasonable certainty regarding the collection of the payment. It is important to understand the distinction between realization and actual cash receipt in accrual accounting. While the realization principle helps businesses recognize revenue accurately in their financial statements, it doesn’t necessarily reflect the cash flow during a particular period.