Final answer:
The difference between revenue recognition over time and upon completion is the timing of when a business records revenue; over time is throughout a service period, while upon completion is after a product or service is fully delivered.
Step-by-step explanation:
The essential difference between revenue recognition over time and revenue recognition upon completion relates to the timing of when revenue is recognized within the accounting cycle of a business. Revenue recognition over time occurs when revenue is recognized as the service is performed or the product is delivered over a period, whereas revenue recognition upon completion happens when a project or sale is fully completed before any revenue is recognized.
For example, a construction company working on a long-term project may recognize revenue over time, based on the percentage of the project completed at the end of each accounting period. In contrast, a furniture manufacturer might recognize revenue upon completion, only when a piece of furniture is sold and delivered to the customer.