Premium Essay

Revenue

In:

Submitted By highyela
Words 1385
Pages 6
Revenue
ECO 204: Principles of Microeconomics
Dawn Jackson
Instructor: Christine Villasenor
July 7, 2013

Introduction Initiating tuition costs at Universities and Colleges can be of an essential importance to college institutions who may be suffering from unfavorable financial effects because of the lack of resources that are being distributed and the increase of education and faculty costs. However; with the increasing cost of tuition, this can have parents wondering if the investment of higher learning is worth it, especially when the costs of college exceeds what a student can make in their first year of working. Can Universities find alternate ways to increase their revenue, other than raising tuition? There are many ways institutions can make more revenue, they just need to collaborate their minds and resources to do so. Nobody State University increases their tuition, hoping to get more revenue, is it a wise decision for administration? In this paper I will go over conditions in which revenue may rise, fall, or remain the same, focusing on the relationship between the increase and decrease of revenue from student enrollments and possible ways to expand their revenue, outside of raising tuition. Well there are many reasons why colleges raise their tuition to increase their revenue, as I will discuss in this paper.
Raising Tuition Was it a good decision for NSU to raise tuition costs, well according to their administration it was. Raising tuition for this University was a way for them to increase their revenue, in which it may not. With the growing anxiety with getting a higher education, it was always a factor with receiving an excellent paying job, however; NSU raising its fees, can increase student debt undermining that college is a good investment, not to mention the combination of shrinking financial and educational returns. With the

Similar Documents

Premium Essay

Revenue

...Revenue is defined in the Framework for the Preparation and Presentation of Financial Statements (2008) as increase in economic benefits during the accounting period in the form of inflows or enhancements of assets or decrease of liabilities that result in increase in equity, other than those relating to contributions from equity participants. Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the entity. An entity usually determines the amount of revenue arising on a transaction by referring to the agreement between the entity and the buyer or user of the asset (Lam & Lau 2009). There have few types of revenue recognition such as from sale of goods, the rendering of services and interest, royalties and dividends. Whereas, some of factors need to be considered when determining when revenue should be recognized in measuring the income of a business enterprise (Lam & Lau 2009). First, the selling price to buyer is fixed or determinable when customer does not have the unilateral right to terminate or cancel the contract and received a cash refund. From the theory, revenue should not be recognized until the refund rights have expired or the specified future events have occurred. However, revenues can be recognized on a pro rata basis if assuming that the amount of refunds can be reliably estimated based on past experience and industry data (Bragg 2010). But, revenue...

Words: 597 - Pages: 3

Premium Essay

Revenue Recognation

...Running head: REVENUE RECOGNITION Revenue Recognition Name: Institution: Course: Tutor: Date: Revenue Recognition Introduction In accounting for revenues an accountant must follow GAAPS guidelines on accounting for revenues. Joy fitness is currently faced with a problem of earning low revenue and wants to seek for a business loan. It is an important requirement for any business to submit all their financial transaction to the financial institutions before the loan is rewarded. Therefore, Joy Fitness must prepare the trading profit and loss account together with other necessary documents for financial institution to consider offering the loan. The amount of loan to be given depends on the amount of returns the company gets or the available assets for an institution to consider their capability to pay. the business owner ask the business accountant to recognize the revenue related to the membership dues, the revenue from the coupon books sold, and the machines that have been sold which is against GAAPS guidelines (Albrecht et al 2011). Violating the GAAP Principles of Revenue Recognition By recognizing the membership due as an income received the business owner will be making a mistake because the income from the fees is normally collected in advance. Also the membership can be refunded if the member cancels out the membership. Therefore the income from the membership fees should only be recognized by the business...

Words: 969 - Pages: 4

Premium Essay

Revenue Recognition

...Question 4-20 ALLIDE CONSTRUCTION COMPANY REVENUE RECOGNITION FOR THE YEARS 2011, 2012 & 2013 THREE YEAR CONTRACT VALUED @ 64,000,000.00 EXPECTED COST 46,000,000.00 YEAR DEGREE OF COMPLETION REVENUE RECOGNISED EXPENSES RECOGNIZED PROFIT 2011 7,200,000.00 16% 10,017,391.30 7,200,000.00 2,817,391.30 2012 20,100,000.00 44% 27,965,217.39 20,100,000.00 7,865,217.39 2013 18,700,000.00 41% 26,017,391.30 18,700,000.00 7,317,391.30 TOTALS 100% 64,000,000.00 46,000,000.00 18,000,000.00 Question 4-22 The revenue recognition criteria for the sale of goods require the following conditions to be met before any revenue from the sale of an item can be recognised. They are as follows: • There has been transfer of the risk and rewards to the buyer. • The company no longer has managerial involvement or control over the goods sold. • Revenue can be easily measured. • It is likely that economic benefits from the transaction will flow to the seller • The cost incurred or to be incurred with respect to the transaction can be reliably measured. In this instance the seller has entered in to a “Layaway” agreement with the buyer which should run 6 months to a year; the agreement further state that a storage fee of $35 is payable and a possible default fee of $100.00 which will be used to reduce the final payment if all monthly payments are made...

Words: 619 - Pages: 3

Premium Essay

Revenue Recognition

...Jacqueline Mitchell 01/09/16 LP 2.1Assignment: Revenue Recognition Concepts questions b. What it means for a business recognizes revenue is to record sales for product and/or services in the general ledger and reported on the income statement every reporting period. Revenue should be recorded when earned. GAAP criteria for revenue recognition a transaction (sale) takes place and the amount is either paid at the time of purchase or collected based on terms set and with a certain degree of reliability. The accounts that are impacted by revenue are cash, accounts receivable, sales/revenue, deferred (unearned) revenue and inventory/services rendered. I include inventory/services because it is the initial step towards recognition once product or services are sold. All financial statements (balance sheet, income statement, statement of cash flows, and owner’s equity). FASB criteria for revenue recognition is definitions, measurability, relevance and reliability. According to FASB Statement of Concepts No. 5 the guidance for recognizing revenues and gains is based on their being: * “Realized or realizable – Revenues and gains are generally no recognized as components of earnings until realized or realizable.” * “Earned – Revenues are not recognized until earned. Revenues are considered to have been earned when the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues. For gains, being earned in generally less...

Words: 475 - Pages: 2

Premium Essay

Revenue Recognition

...Revenue recognition practices are one of the most common reasons for accounting restatements. Many would believe that it is a basic principle: when a sales transaction occurs, revenue is recorded. Unfortunately, there are many different sales and services that make revenue recognition a much more complex issue. It is difficult to develop guidelines applicable to all industry transactions to record revenue. There are two basic guidelines to follow when decided if a company should recognize revenues. “According to GAAP, revenue is recognized at the earliest moment in time that both of the following conditions are satisfied: The critical event in the process of earning the revenue has taken place, and the amount of revenue that will be collected is reasonably assured is measurable with a reasonable degree of reliability.” There are two main ways companies recognize revenue. Most companies meet the requirements for recognizing revenues at the point of sale, or delivery. The other method used is called revenue recognition before delivery, and there are two methods used: Percent-of-Completion Method and Completed-Contract Method. “At the point of sale” seems like a simple concept when you deliver a service or item and you recognize revenue. This is not always the case. There are a few departures that can occur from the sales basis of recognizing revenue. One is to recognize revenue earlier than the time of the sale or service, which is appropriate if you have a high degree...

Words: 618 - Pages: 3

Premium Essay

Revenue Recognition

...To Recognize or Not to Recognize Revenue – That is the Question. Revenue recognition issues are the subjects of headlines in our daily newspapers, primarily because major corporations have recognized revenues that did not actually exist. Just when we think we have all the bad news, another corporation is restating earnings for prior years. For a cash only business, revenue recognition is a simple process. A sale equals revenue. The more complex the business, the more specialized the industry, the more difficult the decision becomes for that business as to when to recognize earnings. On its mission to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information, the Financial Accounting Standards Board (FASB) added to its agenda in 2002 a project designed to develop a comprehensive Statement of Financial Accounting Standards that will focus on revenue recognition that will apply to all industries. Revenue recognition guidance exists throughout accounting literature, accounting and audit guides and audit risk alerts for specific industries and the SEC's SAB 104. Yet there is no one comprehensive source. FASB issued WHY IS REVENUE RECOGNITION SO IMPORTANT? In its October 2002 Report on Financial Statement Restatement, the GAO said that restatements for improper revenue recognition resulted in larger drops in market capitalization than any...

Words: 891 - Pages: 4

Premium Essay

Revenue Recogniation

...University Malaysia Kelantan (UMK) Malaysian Graduate School of Entrepreneurship and Business (MGSEB) Course Name: Financial Reporting & Controlling Course Code: GST 5033 “Revenue Recognition of AirAsia” Submitted To: Prof Dr. Zulkarnain Bin Muhamad Sori Submitted By: Mohammad Osman Goni (Matric No. P13D179F) Hayder Alwan Kadhim – P13D20F Wesam Esam Hamzi - P14D482F Assel Faisal - P14D484 VALUE CHAIN OF AIRAISA To better understand and analyze the specific activities through which AirAsia can create a competitive advantage, a value chain analysis for airline industry has been conducted as below to model AirAsia as a chain of value creating activities. The goal of these activities (Inbound logistics, Operations, Outbound logistics, Marketing and Sales, and Service) is to create value that exceeds the cost of providing the product or services, thus generating a profit margin. Figure: Sample Value Chain of Airline Industry Value Chain of AIRASIA Inbound Logistics: As inbound logistics involves different categories in airline industry for example how to schedule flights, keeping an eye on their competitors that what strategy they are adopting how to sustain in market, and how to cut off their price as they manage fuel efficiency by purchasing it advance when prices are low, and how to plan routes as they mostly plan short routes so that their costs are low. Outbound Logistics: As air Asia mostly uses their operations through online as their...

Words: 1365 - Pages: 6

Premium Essay

Revenue Recognition

...The proposed revenue recognition principle would require companies to restate prior years financial statements to reflect treatment under the new standard. The current revenue recognition principle recognizes revenue when the earnings process is complete and there is reasonable assurance that the company is going to collect on the asset. The main principle in the new standard says that a company is going to recognize revenue when the goods or services are transferred and the amount recognized is the amount that reflects what the company expects to be entitled to. What a company expects it’s going to earn is different from what the company actually collects. There are a few steps that need to be followed in order to apply this new standard. One of the keys steps its to properly identify the contract with the customer, whether implicit or explicit contract. The next is to identify the performance obligations in the contract. This is really to establish what goods or services are being transferred. A performance obligation is accounted for separately from other performance obligations if it is distinct. The obligations are distinct if the goods or services can be used separately and independently from everything else. The next step is determining the transaction price. Complications arise in determining the transaction price when there is variable consideration or time value of money. Variable consideration includes discounts, rebates, refunds, credits, etc. Current GAAP says...

Words: 520 - Pages: 3

Premium Essay

Revenue Recognition

...Revenue Recognition: Where it Will Take Us By Robert Bloom and Jacob Kamm Financial Executive • SUMMER 2014 FINANCIAL REPORTING Since 2008, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have collaborated on a converged revenue recognition standard. Current U.S. Generally Accepted Accounting Principles (GAAP) standards related to revenue recognition are essentially rules-based, containing over 200 specific requirements related to revenue recognition. In FASB's news release of May 28th, Chairman Russell Golden stated "the [new] revenue recognition standard represents a milestone in our efforts to improve and converge one of the most important areas of financial reporting. It will eliminate a major source of inconsistency in GAAP, which currently consists of numerous disparate, industry-specific pieces of revenue recognition guidance." The wide-ranging converged standard eliminates detailed industry-specific codification contained in GAAP and streamlines revenue recognition guidance by superseding numerous standards issued by the FASB, the Securities and Exchange Commission (SEC), the Emerging Issues Task Force (EITF), and the American Institute of Certified Public Accountants (AICPA). The converged revenue recognition standard acts as a roadmap on how standard setters will approach other issues, including leasing. SUMMER 2014 • FinancialExecutive Fundamental to the new standard is that revenue...

Words: 2197 - Pages: 9

Premium Essay

Revenue Recognization

...CHAPTER 5 Revenue Recognition and Profitability Analysis Part A: Introduction to Revenue Recognition I. Revenue Recognition in General A. FASB definition: "Revenues are inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations." In other words, revenue tracks the inflow of net assets that occurs when a business provides goods or services to its customers. B. To determine how much revenue to recognize and when to recognize it, we apply the core revenue recognition principal: Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services. 1. Key concept: the seller has one or more performance obligations. a. Performance obligations are promises to transfer goods or services to the customer. b. Revenue recognition is tied to satisfaction of performance obligations. C. Five steps are used to apply the principle: 1. Identify the contract with a customer. 2. Identify the performance obligation(s) in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to each performance obligation. 5. Recognize revenue when (or as) each performance obligation is satisfied. D. Key considerations for each of the five steps that we will learn...

Words: 3077 - Pages: 13

Premium Essay

Techmall.Com’s Revenues

...AICPA Case Development Program Case No. 2001-06: TechMall.com’s Revenues ♦ 1 TechMall.com’s REVENUES Monte R. Swain, Associate Professor Brigham Young University, Provo, Utah Kip R. Krumwiede, Assistant Professor Brigham Young University, Provo, Utah Kevin D. Stocks, Professor Brigham Young University, Provo, Utah Kyle J. Pexton, Vice-President Finance Authorize.Net, Inc., Provo, Utah TechMall.com’s Revenues1 As Sheri walked back to her office from the morning’s meeting, she was painfully aware that the other executives and managers were splitting up into lunch groups and leaving the office, and she was without an invitation. However, she wasn’t surprised. After the report she had just presented to them, they had a lot to think about. The report was difficult for some to accept. First, the news wasn’t good. Second, she wasn’t able to answer a number of penetrating questions as to the exact reason that revenue was flat this last year for TechMall, nor could Sheri provide a rational plan for what needed to happen this upcoming year to reenergize the revenue line and improve profits. However, given the fact that her finance team had worked hard just to close the books and get the numbers to Sheri in time for the meeting, there had simply not been time to perform a thorough analysis of the unexpected results. At the end of the meeting, Doug Liddle, the CEO, announced that the group would reconvene in exactly one week to receive from Sheri a more complete analysis and her recommendations...

Words: 5131 - Pages: 21

Premium Essay

Ryanair Revenues

...RYANAIR CASE: REVENUES ANALYSIS 1 According to the Profit & Loss accounts of Ryanair, the operating revenues are splitted into two categories: the scheduled revenues and the ancillary revenues. The scheduled revenues are generated through direct sales of flight tickets while the ancillary revenues1 are generated from other non-ticket sales. Figure 1 depicted the growth of the scheduled and the ancillary revenues from 2004 to 2011. While the scheduled revenues increases from € 924,5 mio to € 2.827,9 mio with an increasing return factor equals to 206%, the ancillary revenues increases from € 149,6 mio to € 801,6 mio with an increasing return factor equals to 436% during the period 2004 to 2011. K€ 3.000.000 2.500.000 2.000.000 Scheduled Revenues 1.500.000 Ancillary revenues 1.000.000 500.000 2004 2005 2006 2007 2008 2009 2010 2011 Year Figure 1. Scheduled & Ancillary Revenues Growth from 2004 to 2011 During the same period, Ryanair has produced an average annual increase of the ancillary revenues of approximately 27%. 25% 22% 22% 2010 2011 20% 20% 18% 16% 15% 15% 2005 2006 16% 1 4% 10% 5% 0% 2004 2007 2008 2009 Figure 2. Ancillary Revenues as Percentage of Total Operating Revenues from 2004 to 2011 1 In the Airline industry, Southwest Airlines Company firstly introduced the ancillary revenues. 2 In Table 1, I have reported the evolution of the average...

Words: 1132 - Pages: 5

Premium Essay

Revenue Recognition

...theme Revenue Recognition R evenue is usually the largest single item in financial statements, and the issues involving revenue recognition are among the most important and difficult ones that standardsetters and accountants face. In recent years, concerns related to the recognition of revenue in accordance with Accounting Standards have heightened significantly. Quite often, companies end up tweaking the Revenue numbers, besides some other reasons. Recording revenue improperly is also a commonly used ‘earnings management technique’. The ever evolving business models and the growing online economy have only compounded the issue. Earnings Management/Issues with revenue recognition have been the subject of headlines in the United States and in the other parts of the world in the last few years. -Shrikant Sortur The author is a member of the Institute as well as AICPA, working with Lason Systems Inc, MI, USA. He can be reached at shrikant_ sortur@yahoo.com Revenue Recognition Under US GAAP It is estimated that Revenue Recognition related aspects appear in close to two hundred different pieces of accounting literature; of course these pieces of literature include many nuances, some of which are unique to particular transactions. Since no comprehensive standard on revenue recognition exists, there is a significant gap between the broad conceptual guidance in the Financial International Accounting Standards (IAS) are drafted on a ‘Principles-based’ approach....

Words: 4365 - Pages: 18

Premium Essay

Revenue and Expense Recognition

...CASE 2-1 Revenue and Expense Recognition—Orthodontic Centers of America CASE OBJECTIVES The objective of this case is to evaluate the revenue and expense recognition methods used by the company. INTRODUCTION The following information was extracted from the 1999 and 2000 annual reports of Orthodontic Centers of America [OCA]. The company provides practice management services to orthodontic practices in the United States. OCA acquires and develops orthodontic centers and manages the business operations and marketing aspects of affiliated orthodontic practices. At December 31, 2000, there were 592 orthodontic centers, of which the company developed 306 and acquired 361 (75 were consolidated into another center). The affiliated orthodontists control the orthodontic practices, determine which personnel, including orthodontic assistants, to hire or terminate, and set their own standards of practice in order to promote quality orthodontic care. A typical patient receives an initial consultation and preliminary procedures (teeth impressions, x-rays, and the placing of spacers between the teeth for braces) in advance of the next appointment. The patient signs a contract for treatment in the event the orthodontist recommends orthodontic treatment. Generally, braces are applied two weeks later and subsequent adjustments to the braces are made every four to eight weeks. The contract specifies the terms and the length of the treatment as well as the total fees. The average contract length...

Words: 1561 - Pages: 7

Premium Essay

Revenue Recognition Projext

...Statement Notes Page 4 – Related Article Summary Page 1 – Textbook Problem Page 2 – Supporting References Page 3 – Financial Statement Notes Page 4 – Related Article Summary Revenue Recognition Target & Walmart Revenue Recognition Target & Walmart 1. Textbook Problem (a) – What is the authoritative literature addressing revenue recognition when right of return exists? (b) – What is meant by “right of return”? Per FASB Accounting Standards Codification (ASC) topic 605-15-05-2 (right of return): ”It is the practice in some industries for customers to be given the right to return a product to the seller under certain circumstances. In the case of sales to the ultimate customer, the most usual circumstance is customer dissatisfaction with the product. For sales to customers engaged in the business of reselling the product, the most usual circumstance is that the customer has not been able to resell the product to another party. (Arrangements in which customers buy products for resale with the right to return products often are referred to as guaranteed sales.)” (c) – When there is a right of return, what conditions must the company meet to recognize the revenue at the time of sale? If a transaction is made that includes a right to return, for the selling company to recognize the revenue at the time of the sale the following six conditions must be met: 1. The seller’s price to the buyer is substantially fixed or determinable at the date of sale 2. The...

Words: 1403 - Pages: 6