"Revenue Recognition Fraud" Essays and Research Papers

  • Revenue Recognition Fraud

    Revenues are realized when goods and services are exchanged for cash or claims to cash (that is, receivables). Revenues are realizable when assets received in exchange are readily convertible to known amounts of cash or claims to cash. Revenues are earned when the entity has performed its duties to be entitled to compensation. There are 4 main transactions of this kind: Revenue from selling inventory is recognized at the date of sale (usually interpreted as the date of delivery). Revenue from...

    Balance sheet, Contract, Cost of goods sold 858  Words | 3  Pages

  • Revenue Recognition at Ea

    have chosen to address is the issue of revenue recognition. Revenue Recognition Analysis I started by looking at EAs annual report (Form 10-K) for the fiscal year ending March 31, 2007. Revenue recognition is discussed in some detail. In particular, they state that revenue is recognized according to the criteria established by Statement of Position (“SOP”) 97-2, “Software Revenue Recognition”, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions” ...

    Balance sheet, Deferral, Form 10-K 833  Words | 3  Pages

  • Case Project Revenue Recognition Integrating

    ACCT 301­01                                                                                              Carlos Briones  Revenue Recognition Case                                                                           Amanda Eng  Alipasha Ziaee        1. Revenue Recognition for Multiple­Element Arrangements ­ The Case of Velocity  Cellular    a) According the ASC 605­25­25­5 there are two criteria that must be met in order  to be considered a separate deliverable and a separate unit of accounting: ...

    Generally Accepted Accounting Principles, Microeconomics, Paragraph 1320  Words | 6  Pages

  • Revenue Recognition Problems in the Communications Equipment Industry

     Financial Reporting and Analysis – ACG6175 Date: 5/18/09 Revenue Recognition Problems in the Communications Equipment Industry 1 – In late 2000, Lucent announced that revenues would be adjusted downwards by $679 million as a result of revenue recognition problems. Yet the firms market capitalization plummeted by $24.7 billion. Why do you think the market reacted so negatively to Lucent's announcements of the problems? There is usually a grey zone between aggressive accounting, which...

    Accounts receivable, Balance sheet, Financial statements 1336  Words | 5  Pages

  • Should Apple Lobby the FASB to Change the Revenue Recognition Rules for Smartphones?

    Q3: Should Apple lobby the FASB to change the revenue recognition rules for smartphones? In our opinion, Apple should lobby FASB to change the revenue recognition rules for smartphones, given the following reasons:- 1. Under “non-GAAP measures”, Apple’s performance looked much better than that under GAAP measures. Please find below a table1 summarizing the differences of key financial data between GAAP and non-GAAP measures for the fourth quarter of 2008:- Q4 2008 GAAP ($ billions) Non-GAAP...

    Apple Inc., Financial statements, Generally Accepted Accounting Principles 597  Words | 4  Pages

  • Apple Revenue Recogonition

    Apple revenue recognition Apple Inc Revenue Recognition Concepts A. Revenue is gross amount a company received or billed from service provided or units sold, Revenue is earned regardless money come in or not at that particular time. It is assumed revenue is earned, when it is realizable, and earned. Revenues are derived from company normal operation. The company exist to sell it is core product or services to the market. Gain rise from...

    Accounts receivable, Balance sheet, Cash flow 927  Words | 6  Pages

  • Restating Revenues and Earnings at INVESTools Inc.

    1. Years Ended December 31, 2004 2003 2002 Revenue (pre-tax) $99.6 $73.4 $56.1 Cost of sales (Revenue x 40%) ($39.8) ($29.4) ($22.4) Selling expense ($23.3) ($18.5) ($17.5) General and Administrative expense ($19.9) ($13.2) ($14.2) Depreciation and Amortization ($0.9) ($0.6) ($0.7) Other Income (expense) $0.0 ($1.4) $0.2 Net profit (loss)--GAAP $15.7 $10.3 $1.5 Add back amount eligible for capitalization Under SAB 104 (40% of total costs X 85%) $33...

    Generally Accepted Accounting Principles, Income, Income statement 1524  Words | 5  Pages

  • North Face Case

    financial reporting fraud orchestrated by the chief financial officer (CFO) of a major public company and his subordinates. The CFO, who was a CPA, took extreme measures to conceal the fraud from his company’s audit committee and independent auditors. Despite those measures, the independent auditors identified suspicious entries in the company’s accounting records that were a result of the CFO’s fraudulent scheme but did not properly investigate those items. Shortly before the fraud was publicly revealed...

    Audit, Audit committee, Auditing 1806  Words | 7  Pages

  • Revenue Recognition

    CHAPTER 18 Revenue Recognition OPTIONAL ASSIGNMENT CHARACTERISTICS TABLE Item Description BE18-7 BE18-9 BE18-10 BE18-12 BE18-13 BE18-15 Journal entries under percentage-of-completion method. Journal entries under completed-contract method. Balance sheet presentation of construction contract. Installment-sales method entries. Installment-sales default & repossession. Cost-recovery method. E18-14 E18-15 E18-16 E18-17 E18-18 E18-19 E18-23 E18-25 E18-26 Gross profit on uncompleted contract. Recognition...

    Accounting software, Accounts receivable, Balance sheet 2175  Words | 10  Pages

  • Oracle Systems Corporation Dar O 141471 Ccc

    questions Oracle Systems method of revenue recognition in mid 1990? Are these legitimate concerns? To reflect the economic substance of a firm revenue performance exist two criteria for revenue recognition. The first criteria it is that the earning process is ssentiality complete, that is the firm provided all, or substantially all the goods or services to be delivered to the customer. The second criteria its cash likely to be received. Early revenue recognition provides management with the opportunity...

    Accounts receivable, Balance sheet, Contract 836  Words | 3  Pages

  • Exercises

    tools are expensed when purchased. (f) Agricultural companies use market value for purposes of valuing crops. (g) Each enterprise is kept as a unit distinct from its owner or owners. (h) All significant postbalance sheet events are reported. (i) Revenue is recorded at point of sale. (j) All important aspects of bond indentures are presented in financial statements. (k) Rationale for accrual accounting. (l) The use of consolidated statements is justified. (m) Reporting must be done at defined...

    Balance sheet, Financial statements, Generally Accepted Accounting Principles 1460  Words | 5  Pages

  • North Face Auditing Case

    goals set by management. In the mid-90s a goal was set to hit revenues of $1 billion. This goal was deemed manageable based on their operating profit that they had shown over the years. As time passed, the goal became more difficult and the sense of urgency to claim revenue became a must. Several situations led to fines that would later be placed on the company’s executives including: Christopher Crawford [CFO, CPA]: Claimed revenue from a barter transaction that passed materiality by auditors...

    Audit, Auditing, Deferred income 770  Words | 3  Pages

  • Accounting Case Study

    terms. This is because according to the provisions of the statement of position No. 97 - 2, software revenue recognition a four part conjunctive test must be attained. One of the elements of this conju n ctive test is the compulsory exist ence of persuasive evidence. This is in regard to paragraph 17 which states that even if all other requirements for revenue recognition are met, revenue should be recognized as persuasive evidence of an arrangement exists. In the case of upstream persuasi ...

    Deferral, Existence, Generally Accepted Accounting Principles 395  Words | 3  Pages

  • Income Statement and Milestone

    recognized as revenue? A: FASB codification (605-28) milestone method SolvGen Inc. is gonging to use the milestone method to recognize the revenue. The milestone method is a recently issued method of recognizing revenue for research and development arrangements under which consideration to be received by the vendor is contingent upon the achievement of certain milestones(FASB codification (605-28) milestone method). Under the commonly applied milestone method, a vendor recognizes revenue in the...

    Deliverable, Generally Accepted Accounting Principles, Income 2124  Words | 6  Pages

  • Case 10-11 Solution

    1. Is Eye Vision’s arrangement with Holland Hospital within the scope of ASC 985-605, Software: Revenue Recognition? In this case, the main content of the Eye Vision’s arrangement with Holland Hospital include embedded software medical equipment and an initial option to purchase a two-year separately priced maintenance agreement. In this case, because“Eye Vision has never sold, nor does it offer to sell, the Clear View Laser without the embedded software because the software is necessary to perform...

    American films, Contract, Deferral 1856  Words | 6  Pages

  • Intermediate Accounting (Spiceland) Chaper 5 Cases

    CASES Real World Case 5-1 Requirement 1 A bill and hold strategy accelerates the recognition of revenue. In this case, sales that would normally have occurred in 1998 were recorded in 1997. Assuming a positive gross profit on these sales, earnings in 1997 is inflated. Requirement 2 A customer would probably not be expected to pay for goods purchased using this bill and hold strategy until the goods were actually received. Receivables would therefore increase. Requirement 3 Sales that would...

    Cost of goods sold, Deferral, Generally Accepted Accounting Principles 1222  Words | 4  Pages

  • S&H Green Stamps

    should S&H recognize the revenue and the expense? How much expense should be recognized? S&H Green Stamps – Suggested Solution Revenue recognition: 1. Revenue recognition normally occurs at the time services are rendered or when goods are sold and delivered. The conditions for revenue recognition are: a. an exchange transaction b. And the earnings process being complete. 2. The USA Securities and Exchange Commission has additional guidance, noting that revenue recognition would normally be appropriate...

    Deferral, Depreciation, Double-entry bookkeeping system 720  Words | 3  Pages

  • Chapter 3 Homework

    revenues.The revenue recognition principle states that we record revenue in the period in which we earn it. |   | | 2. |   | Discuss the major principle that describes recording expenses.The matching principle states that we recognize expenses in the same period as the revenues they help to generate. |   |   LO1 | 3. |   | Samantha is a first-year accounting student. She doesn't think it matters that expenses are reported in the same period's income statement with the related revenues (matching...

    Balance sheet, Bookkeeping, Deferral 1290  Words | 4  Pages

  • Intermediate Accounting Chapter 2 Assesment

    Comprehensive income f. Assets g. Comprehensive income h. Revenues/Expenses i. Equity j. Revenues k. Distribution to owners l. Comprehensive income E2-7 a. Historical cost principle b. Full disclosure principle c. Matching principle d. Expense recognition principle e. Industry practices f. Economic entity assumption g. Full disclosure principle h. Revenue recognition principle i. Full disclosure principle j. Matching principle ...

    Asset, Balance sheet, Generally Accepted Accounting Principles 640  Words | 3  Pages

  • Christy Lemonade Stand

    a good way to measure how much she earned from her lemonade business. She is recording revenue when she receives the cash rather than when it is earned. Christy still has a liability to meet (product to deliver) and she can only record revenue when the work is performed, in her case, when the lemonade is delivered to the client. Earning an income means that the total revenues exceed the total expenses. Revenues are earned when the service is performed or when the product is delivered rather than...

    Deferral, Generally Accepted Accounting Principles, Income 290  Words | 1  Pages

  • ACC 349 E2-4 Assumptions Principles and Constraints

    Historical cost principle 6. Fair value principle 7. Expense recognition principle 8. Full disclosure principle 9. Cost-benefit relationship 10. Materiality 11. Industry practices 12. Conservatism Instructions Identify by number the accounting assumption, principle, or constraint that describes each situation on the next page. Do not use a number more than once.  (a) Allocates expenses to revenues in the proper period.  (b) Indicates that fair value changes subsequent...

    Deferral, Depreciation, Economics 533  Words | 3  Pages

  • ACC 305 Wk 1 Quiz Results

    section below. Date Taken: 9/18/2011 Time Spent: 3 h, 28 min, 09 secs. Points Received: 8 / 10 (80%) Grade Details 1. Question : Making insurance payments in advance is an example of:   Student Answer:An accrued revenue transaction.  An accrued expense transaction.  A deferred revenue transaction.  A deferred expense transaction.   Points Received: 1 of 1   Comments:  2. Question : Independent auditors express an opinion on the:   Student Answer:Fairness of financial statements.  Accuracy...

    Accrual, Balance sheet, Contract 478  Words | 3  Pages

  • Earnings Management Hw

    that have used these techniques? 5 popular techniques used by companies are: "big bath" restructuring charges, creative acquisition accounting, "cookie jar reserves," "immaterial" misapplications of accounting principles, and the premature recognition of revenue.  “Big bath” technique: In that technique, companies attempt to overload one period with expenses therefore, the next accounting period shows an upgrading in earnings. Moreover, companies can set up an earnings reserve that can be used...

    Audit, Enron, Enron scandal 1040  Words | 3  Pages

  • Accounting Assigment

    external stakeholders to recognize the market current perception of the company in regard to future profit potential and dividend yield. Question P. 2-5 1. I agree with this decision as according to the Revenue Recognition Principle as soon as a sale or service is completed, the revenues should be recorded by the company irrespective as to when the customer pays. 2. Depreciation cannot be reduced and that said, appreciation is not usually done by the companies. I do not agree with this as the...

    Balance sheet, Costs, Depreciation 1418  Words | 4  Pages

  • Eye Vision Case 10-11

    purchasor. The software has never been sold without Laser for its functional necessity. In this memo, as explained below, we conclude that: 1. Eye Vision’s arrangement with Holland Hospital is not within the scope of ASC 985-605, Software: Revenue Recognition. 2. The deliverables in this arrangement are the Clear View Laser, embedded software, and maintenance plan, respectively. 3. The Clear View Laser together with embedded software and maintenance plan will be accounted for as separate units...

    Computer software, Contract, Deferral 2115  Words | 6  Pages

  • Vendor-specific Objective Evidence

    Hemo-Tech Case Presentation Outline * 1 Myles Intro: Facts: * 1 Issues: Multiple Element Arrangement * How should revenue be allocated to each deliverable? * What sales price should be allocated to each deliverable? * How are deliverables defined? * 25-4 “A vendor shall evaluate all deliverables in an arrangement to determine whether they represent separate units of accounting. That evaluation shall be performed at the inception of the arrangement and as each...

    Christopher Nolan, Consultative selling, Generally Accepted Accounting Principles 578  Words | 3  Pages

  • 06-12c Outsourcing Services Inc

    configure OSI systems, transfer the customer’s data, and set-up its outsourcing services $1,500,000 Expense The contract provides for two sources of revenue – set-up revenue and call revenue. ASC 605-20-25-4 Because it is not an incremental cost. Salaries are period costs. Also ASC 944-30 Deferred Set-Up Revenue ASC 605-20-25-4 The initial set-up fee revenue consists of a nonrefundable, up-front fee of $400,000. This Direct Cost fee is billed to Company X at the onset of the arrangement in order to partially...

    Contract, Copyright, Cost 993  Words | 3  Pages

  • Adjusting Entries

    next 3 months. The full amount was credited to the liability account Unearned Revenue. Assuming that the revenue is earned ratably over the 3-month period, what adjusting journal entry should be made at January 31? Solution 163 1. |Jan 31 |Unread Service Revenue (9,000 X 1/3) |3,000 | | | | Service Revenue | |3,000 ...

    Deferral, Depreciation, Expense 624  Words | 5  Pages

  • Conceptual Frame Work of Accounting

    concepts are defined in SSAP 2 and are often referred to in later SSAPs. The four concepts are defined in the standard as follows: 3.1.1 Business Entity: Business Entity assumes that the business is separate from its owners or other businesses. Revenue and expense should be kept separate from personal expenses. 3.1.2 Going Concern: Going Concern assumes that the business will be in operation indefinitely. This validates the methods of asset capitalization, depreciation, and amortization. Only...

    Deferral, Financial Accounting Standards Board, Financial statements 1770  Words | 6  Pages

  • Introduction to Accounting

    the balance sheet. 2. Matching Principle When determining the profit or loss of the organization for a given period, the income and expenses which are earned and incurred during the period should take into accounts. 3. Revenue Recognition Principle Revenue should report as earned (realized), when everything that should necessary to earn such income has been complete. 4. Full Disclosure Principle All the information about the business entity that is needed and entitle by users...

    Balance sheet, Business, Debt 448  Words | 3  Pages

  • acc/537 outline

    accounting Revenue recognized on financial statements when earned (revenue recognition principle) Expenses recognized on financial statements when incurred (matching principle) Cash-basis accounting Revenue recognized only when cash is received Prohibited under generally accepted accounting principles Violates the revenue recognition principle Adjusting entries: Ensuring revenue recognition and matching principles are followed Prepayments Prepaid expenses Unearned revenues Accruals ...

    Accounting in the United States, Accounting Principles Board, Accrual 288  Words | 2  Pages

  • Basic Accounting Principles And Guidelines

    accounting. The matching principle requires that expenses be matched with revenues. For example, sales commissions expense should be reported in the period when the sales were made (and not reported in the period when the commissions were paid). Wages to employees are reported as an expense in the week when the employees worked and not in the week when the employees are paid. If a company agrees to give its employees 1% of its 2013 revenues as a bonus on January 15, 2014, the company should report the bonus...

    Balance sheet, Deferral, Depreciation 1365  Words | 4  Pages

  • ABONG Rose AKENJI13200149Question 1Is the Enterprise

    ASC985-605-15-3c-2 the PCS is more than incidental to the soft ware. 2. On the basis of the response to Question 1, discuss the revenue recognition accounting literature that would be applied to each unit of accounting in the February 1, 2012, arrangement. Provide the cumulative revenue recognized and deferred revenue balance related to the Buffett arrangement as of April 30, 2012. Revenue should be recognized at their relative fair value following ASC 605-25-30-4To the extent that any separate unit of accounting...

    Contract, Generally Accepted Accounting Principles, Income 700  Words | 3  Pages

  • Pharmagen 9-2 Deloitte Trueblood Case

    3 years to complete drug X from the execution of the agreement • The PEI will contribute funds to the development of X and is entitled to receive future royalties from Pharmagen in return o The PEI will receive royalties associated with future revenues of X (if/when it has been successfully developed) o The PEI will also receive future royalties associated with an existing commercialized drug for a defined period 3. Present your answer and the GAAP that supports your position. Use GAAP...

    Audio Home Recording Act, Contract, Copyright 960  Words | 3  Pages

  • AccountMArk Consultants

    time of sale, Essential should record as additional cost of goods sold, not as a reduction in revenue, because the free product does not represent a return, refund, or rebate of a portion of the sales price paid by the customer. Point and Loyalty Programs Customers can redeem specified quantities of points for awards such as free or discounted products. For this situation, Essential should not deferred revenue related to points awarded to customers. Part Two: Development cost Application Development...

    Customer, Customer service, Generally Accepted Accounting Principles 585  Words | 2  Pages

  • Case 14 3 Coconut Telegraph

    are needed for the hardware to work perfectly, it cannot be within the scope of ASC 985-605. 2.) On the basis of the response to Question 1, discuss the revenue recognition accounting literature that would be applied to each unit of accounting in the February 1, 2012, arrangement. Provide the cumulative revenue recognized and deferred revenue balance related to the Buffett arrangement as of April 30, 2012. Coconut's February 1, 2012 arrangement with Buffet is within the scope of ASC 605 and therefore...

    1966, 1989, Contract 873  Words | 4  Pages

  • Financial Accounting

    five page paper. Please make sure this paper is well organized and covers all of the items below. Part I.    * Why is revenue recognition a significant issue? How do we determine when revenues are recorded for accounting purposes? * Explain the difference between a product and period expense. * Discuss the matching concept as it relates to accounting for revenues and inventory.   Part II.  Refer to the latest annual financial statements for the two following companies: Apple: http://investor...

    Deferral, Depreciation, Financial statements 1498  Words | 5  Pages

  • Actg351 Hw1

    000 59.52% 2013 4,250,000 0 4,250,000 100.00% 1,619,200 1,669,200 -50,000 Cost Incurred to Date Estimated Costs Total Estimated Costs % Completed Revenue Expense Gross Profit 400,000 1,980,800 350,000 2,230,800 50,000 -250,000 2011 Account 1) Record Construction Costs CIP Various Accounts 2) Record Revenue Construction Expense CIP Revenue 3) Billings A/R Billings on CIP Dr 350,000 350,000 Cr 2012 Dr 2,150,000 Cr 2013 Dr 1,750,000 Cr 2,150,000 1,750,000 350,000 50,000...

    Contract, Generally Accepted Accounting Principles, Giving 995  Words | 4  Pages

  • Accounting Cycle Iphone Case

    the example in Exhibit 3. a) Complete the following FSET assuming the Apple follows subscription accounting to account for iPhone’s sales revenue (separately for the transaction in Quarter 1 and in Quarters 2 to 8). Balance Sheet Income Statement Transaction Cash Asset + Noncash Assets - = Liabilities + Contrib. Capital + Earned Capital Revenues - Expenses = Net Income Q1. iPhone Sales +500 -350 Inventory +306.25 Deferred Costs - = +437.5 Deferred Rev. +62.5 -43.75...

    Balance sheet, Generally Accepted Accounting Principles, Income 870  Words | 4  Pages

  • Case 14 3

    Hoang Thi Thanh Ha - 13200154 Case 14-3 Coconut Telegraph 1. Is Coconut’s February 1, 2012, arrangement with Buffett within the scope of ASC 985-605? ASC 985 -605 Software — Revenue Recognition “provides guidance on when revenue should be recognized and in what amounts for licensing, selling, leasing, or otherwise marketing computer software.” It defines “ Software arrangements range from those that provide a license for a single software product to those that, in addition to the delivery of...

    Application software, Computer software, Contract 1468  Words | 5  Pages

  • Costco Case

    The membership fees recorded as revenue when received in Costco’s financial statement in 1998 according to the cash accounting. * Was this correct? If not, what accounting principle does it violate? No. It violates the revenue recognition principle because they did not provide services to members when they pay the membership fee during this fiscal year. It can only record this item as unearned revenue under the liabilities and change them into revenue at the end of the year. * How did...

    Accrual, Deferral, Generally Accepted Accounting Principles 657  Words | 3  Pages

  • Accounting. Revenue Recognition Assignment

    CHAPTER 18 Revenue Recognition ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) | | |Brief  | | | Concepts | |Topics |Questions |Exercises |Exercises |Problems |for Analysis | |*1. Realization and recognition; sales |1, 2, 3, 4, |1, 2, 3, |1, 2, 3, 4, ...

    Balance sheet, Cost of goods sold, Generally Accepted Accounting Principles 25763  Words | 129  Pages

  • Velocity Cellular Revenue Case

    on a l P r onou n c e m e n ts ASC 605-25, Revenue Re cogni t ion : Mul t ipl e- E l ement A r r angements (ASC 605-25) (formerly EITF Issue No. 00-21, Revenue Arrangements With Multiple Deliverables (Issue 00-21)), as amended by ASU 2009-13, Revenue Re cogni t ion (Topi c 605) : Mul t ipl e- D e l ive r abl e Revenue A r r angements (ASU 2009-13) (formerly EITF Issue No. 08(Issue 08-1)) SEC Staff Accounting Bulletin Topic 13, Revenue Recognition (SAB Topic 13) P rof essor N ot e : This...

    All rights reserved, Copyright, Deliverable 4934  Words | 15  Pages

  • Just in Time Concept

    Introductory Financial Accounting S. Das Income Measurement and Accrual Accounting Recognition and Measurement in Financial Statements DEFINITIONS Revenues: inflows of assets or reductions in liabilities from selling goods and services Expenses: outflows of assets or increases in liabilities used up in generating revenues. Recognition formal recording of an item in financial statements, in words and numbers Measurement quantify the effects of economic events numbers unit...

    Asset, Balance sheet, Deferral 2747  Words | 14  Pages

  • Lucent Case Study

    2. What financial statement adjustments will Lucent have to make to correct the revenue recognition problems announced in late 2000? Lucent recognized revenue when persuasive evidence of an agreement exists, delivery has occurred, the fee is fixed and determinable, and collection of the resulting receivable, including receivables of customers to which Lucent has provided customers financing, is probable. For sales generated from long-term contacts, primarily those related to customized network...

    Balance sheet, Financial statements, Generally Accepted Accounting Principles 381  Words | 2  Pages

  • Principle of Accounting

    (Weygandt, 2008). The principles of accounting are revenue recognition, matching, full disclosure, and cost. These principles are the guidelines on how economic occurrences should be communicated when it comes to the account process. The revenue recognition principle states that a company should be able to recognize the earnings of a company through this principle. The matching principle declares that expenses should be matched to the revenue with in the period of time it was earned. When companies...

    Balance sheet, Economics, Financial statements 471  Words | 2  Pages

  • financial accounting

     21. Generally accepted accounting principles c. derive their credibility and authority from general recognition and acceptance by the accounting profession. 22. A soundly developed conceptual framework of concepts and objectives should d. all of these. 23. Which of the following (a-c) are not true concerning a conceptual framework in account-ing? c. It should be based on fundamental truths that are derived from the laws of nature. S24. Which of the following is not a benefit associated...

    Balance sheet, Concept, Depreciation 2388  Words | 11  Pages

  • Quality of Earning

    periodicity. Periodicity states that each transaction should be assigned to a given period and split accordingly if it covers several periods. This is an attempt to recognize revenues in the period in which they were actually earned (revenue recognition principle) as well as to match the related expenses to the earned revenue (GAAP's matching principle).  Accrual earnings rely on management's judgment (and expectations) to record transactions. Does this make the financial statements relevant or...

    Deferral, Generally Accepted Accounting Principles, Income 319  Words | 2  Pages

  • User Manual -Binary Stream

    Site Property Information 22 Site – Equipment 25 Site – Insurance 26 Site – Contact 27 Revenue Transactions 29 Tenant Lease Invoice Creator (Receivables) 29 Without Alternate Tenants 34 With Alternate Tenants 35 Recognition Schedule Entry 36 Journal Entry Processing 44 Create Recognition Journal Entry Action 47 Reverse Recognition Journal Entry Action 47 Stub/Reverse Stub on Recognition Amount 48 Building/Portfolio Maintenance (Cards > Property Site Management > Building...

    Deferral, Generally Accepted Accounting Principles, Insurance 7859  Words | 35  Pages

  • Solution Chapter 18

    recognize revenue at the point of sale based upon the time of shipment because the books are sold f.o.b. shipping point. Because of the return policy one might argue in favor of the cash collection basis. Because the returns can be estimated, one could argue for shipping point less estimated returns. (b) Based on the available information and lack of any information indicating that any of the criteria in FASB Statement No. 48 were not met, the correct treatment is to report revenue at the time...

    Accounts receivable, Balance sheet, Costs 9466  Words | 60  Pages

  • Accrual basis vs cash basis accounting

    Accrual Basis over Cash Basis Accounting There are two accounting methods that companies use to report revenues and expenses. The two methods are the accrual basis and cash basis. The difference in the accounting processes will fundamentally change the way the organization reports its cash, so a decision must be made prior to recording any transactions. Accrual Basis Accounting Accrual basis accounting is the method accepted by commercial accounting and the general accepted accounting principles...

    Deferral, Depreciation, Finance 423  Words | 2  Pages

  • Accrual Basis and Cash Basis Accounting Paper

    different years which different methods. The revenue recognition principle is a rule that requires that companies recognize any revenue in the period in which it was earned. Take the example of a service company, if Snoopy babysitting services provided a service this week and was paid accordingly then the revenue must be noted in this period. It cannot be held back for a future period or reported in a past one. The same goes for expense recognition, expenses must be recognized in the period that...

    Deferral, Depreciation, Expense 701  Words | 2  Pages

  • Stats

    any particular period. 3. To find out the total capital on a particular date. 4. To maintain the cash accounts through the Cash Book and to find out the Cash balance on any particular day. 5. To detect any defalcations and to check the frauds and misappropriations of money. 6. To detect the various errors and to rectify those through entries in the journal proper. 7. To confirm about the arithmetical accuracy of the books of accounts. 8. to help the management by supplying...

    Balance sheet, Bookkeeping, Double-entry bookkeeping system 3515  Words | 13  Pages

  • ACCT Circuit City Stores

    accounting practices, specifically regarding the recognition of revenue from the sale of extended warranty and product maintenance contracts. Chalifoux had just learned that the Financial Accounting Standards Board (FASB) had released a proposed FASB technical bulletin that would require Circuit City Stores to change its accounting for extended warranty and product maintenance contracts. The proposed accounting change would delay full recognition of revenue and income until the warranty period had expired...

    Asset, Balance sheet, Generally Accepted Accounting Principles 4109  Words | 24  Pages

  • Gaap

    objectives and implement fundamental qualities GAAP has four basic assumptions, four basic principles, and four basic constraints. Assumptions • Accounting Entity: assumes that the business is separate from its owners or other businesses. Revenue and expense should be kept separate from personal expenses. • Going Concern: assumes that the business will be in operation indefinitely. This validates the methods of asset capitalization, depreciation, and amortization. Only when liquidation...

    Balance sheet, Deferral, Depreciation 487  Words | 2  Pages

  • Financial Accounting Exercises

    generally accepted accounting principles that relate to adjusting the accounts. Matching principle and revenue recognition principle 3. Rick Marsh, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Marsh’s law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why? He should record the service revenue in May because that is when he provdes the service. 4. Why do accrual-basis financial statements provide...

    Accrual, Deferral, Depreciation 484  Words | 2  Pages

  • Weekly Reflection Acc290

    accounting is used a company is recognizing revenue when it is earned which is also called the revenue recognition principle. Companies will also recognize when revenue is incurred known as the matching principle. The cash basis accounting is a process company’s use only when cash is received. This process is also recorded also when cash is paid. This process is generally prohibited as an accepted accounting process due to its inability to record revenue when earned. This process also does not record...

    Bookkeeping, Deferral, Double-entry bookkeeping system 439  Words | 2  Pages

  • Financial Accounting Case Study

    LH Fall 2013 RSM 221 Individual Assignment 1 Suggested Solution Question 1: Problem Exhibit 1 Purpose: To determine the percentage of completion for the selected contract in order to determine the company's revenue and gross profit (loss) for 2014, 2015 and 2016. Percentage-of-Completion (Cost-to-Cost Basis) Contract price: (A) Costs: Opening balance of costs Costs incurred during the year Costs to date (B) Estimated costs to complete Estimated total costs (C) Estimated total...

    Contract, Contract law, Contract price 1845  Words | 10  Pages

  • Accounting Assumptions

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