COMMERCE 1BA3 Lecture Notes - Lecture 6: Opportunity Cost, Net Income, Retained Earnings
22 Oct 2013
School
Department
Course
Professor
Document Summary
Chapter 7: reporting and interpreting sales revenue, receivables and cash. Many companies try to overstate revenue accounting income is not taxable income; overstate to maximize return to shareholders; more revenues, more support from shareholders, which reflect in stock prices. Revenue recognition principle recognize revenues when: the earnings process is complete or nearly complete (service performed) Transfer of ownership reasonable assumption that service has been performed. Shipping term (f. o. b = free on board; freight on board) F. o. b shipping point the title of goods passes from the seller to the buyer at the sellers point of sale. If damaged in transit; buyer is responsible: auditors want to see that goods have been received; other wise revenue is overstated. F. o. b destinations the title of goods passes from the selling to the buyer when the goods are delivered to the buyer: property of seller until reaches buyer; insurance/liability is sellers responsibility.
