Realization Concept

The realization concept of accounting is one of the basic accounting terms. Realization means that the money has exchanged hands, or been realized. For instance, if I am going to purchase a car but have not then there has been no realization. If I purchase the car, the money has been realized by whomever I have purchased it from. It is factually in their hands at that point.

 Suppose an order was received from a customer in January, 2011.. the goods were manufactured as per this order in February, 2011; and the delivery of goods was made in March, 2011; the payment of which was received in April, 2011. According to realization concept the revenue from this sale would be deemed to accrue in March, 2011, when the possession and title of the goods were transferred to the customer, though its payment was received in April, 2011.

i completely agree with vinnz

     Very nice eg...

   The situs of realisation is transfer of risk to the other party.....!!!!!

Cheers

realization is a transaction of the neutralization of debit account by payment, 

debit a/c gets generated only after issue of invoice, so the realization is now subject and after the invoice date only.