CHAPTER 18 REVENUE RECOGNITION MULTIPLE CHOICE—Conceptual AnswerNo.Description c1.Revenue recognition principle. b2.Definition of "realized." a3.Definition of "earned." d4.Recognizing revenue at point of sale. d5.Recording sales when right of return exists. c6.Revenue recognition when right of return exists. d7.Revenue recognition when right of return exists. b8.Appropriate accounting method for long-term contracts. c9.Percentage-of-completion method
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To: Bruce Darling From: Jordyn Peterson Date: October 28, 2014 Subject: Revenue Recognition The SEC provides criteria to help assess risks for the timing of revenue recognition. Recognizing revenue can be difficult to decide so auditors refer to the provided guidance to apply the concept that revenue should not be recognized until it is realized or is realizable and earned. The criteria to help decide when revenue should be recognized includes: * Pervasive evidence of an arrangement exists
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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
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CHAPTER 18 Revenue Recognition ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis *1. Realization and recognition; sales transactions; high rates of return. 1, 2, 3, 4, 5, 6, 22 1 1, 2, 3 1 1, 2, 3, 4, 5, 7, 8, 9 *2. Long-term contracts. 7, 8, 9, 10, 11, 12, 22 2, 3, 4, 5, 6 4, 5, 6, 7, 8, 9, 10 1, 2, 3, 4, 5, 6, 7, 14, 15, 16, 17 1, 2, 3, 6 *3. Installment sales. 13, 14, 15, 16, 17,
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General Instructions There are ten cases included in this packet (Cases #1 through #9). You are responsible for reading all nine cases prior to class on Monday, October 7th. In addition, your group is responsible for informally presenting the solution to one case on that date. The case assigned to each group corresponds to your group number. Your presentation should take the form of “teaching” the rest of the class the material related to the case. Keep in mind that for exam purposes all groups
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Those principles are revenue recognition principle and expense recognition principle. After discovering which transactions are applicable the information is input in the financial statements. Then the applicable information is written in a journal with explanations. Sometimes changes occur and when this happens one needs to understand the situations requiring adjustment journal entries. The revenue recognition principle requires the company to only recognize earned revenue in the accounting period
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method would be most like the typical revenue recognition method at point of product delivery. The names of the students are Bill and John. Bill believes that the completed -contract method is most like recognizing revenue at point of delivery because in the end the final product is delivered and has fulfilled any requirements to recognize revenue. John believes that percentage-of-completion is most like point of delivery and this allows a company to recognize revenue over time. I support Bill’s opinion
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division. Problem Statement: The CFO of the company, Daniel Fischer undertakes a revenue recognition review for each of the 3 divisions as SEC has issued SAB 101 guidelines. The effects of applying this guideline would be reported as a cumulative effect adjustment resulting from a change in accounting principle. As a test, Fisher has selected from each of the three divisions a limited number of representative sales transactions to review and the main question is- if all revenue recognition criteria
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Exercise 5–6 Requirement 1 July 1, 2013 Installment receivables ................................................... 300,000 Sales revenue .............................................................. 300,000 To record installment sale Cost of goods sold .......................................................... 120,000 Inventory..................................................................... 120,000 To record cost of installment sale Cash ..................................................
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CHAPTER 07 REVIEW 1. One of the most difficult issues facing accountants concerns the recognition of revenue by a business organization. Although general rules and guidelines exist, the significant variety of marketing methods for products and services make it difficult to apply the rules consistently in all situations. Chapter 7 is devoted to a discussion and illustration of revenue transactions that result from the sale of products and the rendering of services. Throughout the discussion
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