ACTG 2011 Lecture Notes - Lecture 6: Financial Statement, Intangible Asset, Revenue Recognition
Document Summary
Jed/arielle (preparers) - may have bias towards higher net income to impress vince. Vince (primary user) - wants to see good profitability (honest representation) to see if he should loan jed money or even invest into tealightful (he needs to make this decision). Conflict between vince and jed/arielle because of high income bias from jed. This will be resolved as we are auditing the financials. Disclose that you rely heavily on 2 suppliers 25% and 35% respectively for your inventory purchases [inventory costs] Mention creating an allowance if information is available regarding the amount of product recalls (lowers net income), and definitely disclose this risk in the financial statements. Partea infuser cups - tlf needs to book journal entries obviously [journal entry] Advise babbles on how to make the appropriate journal entries when dealing with refunds (cash vs store credit aka unearned revenue).
