Recognition is the process of including an item in the financial statements of an entity. According to the conceptual framework for financial reporting, recognition refers to the process of including an item in the statement of financial position, statement of comprehensive income, or statement of changes in equity, depending on the nature of the item.

In order to be recognized, an item must meet certain criteria, including:

1. It must meet the definition of an asset, liability, equity, income, or expense, as outlined in the conceptual framework.
2. It must be probable that any future economic benefit or obligation associated with the item will flow to or from the entity.
3. The item must have a cost or value that can be reliably measured.

Overall, recognition is an important aspect of financial reporting, as it allows entities to provide information about their financial position and performance to users. By recognizing items in the financial statements, entities can provide users with a clear understanding of their financial position and performance, which can help users make informed economic decisions.

Here is an example of recognition:

Let's say a company has sold goods to a customer for $1,000. The customer has not yet paid for the goods, but the company has a legal right to receive the payment from the customer.

To recognize this transaction, the company would record the following journal entry:

Accounts receivable (asset) $1,000

Sales revenue (income) $1,000

By recording this journal entry, the company is recognizing the sale of goods and the legal right to receive payment as an asset (accounts receivable) and income (sales revenue) on their financial statements.

It is important to note that recognition criteria may vary depending on the specific item being recognized and the accounting standards being used. However, the principles of recognition outlined in the conceptual framework generally apply to all financial reporting frameworks.