Management and Organizational Studies 3370A/B Lecture Notes - Matching Principle, Deferred Income, Income Statement

31 views3 pages

Document Summary

Apply the matching principle to recognize expenses. Describe the basic format and the contents of the income statements. Explain additional items on the income statement. Explain the effects of sales on the cash flow statement. 57% errors in revenue highest level of material impact to f/s: 92% of public companies use manual processes/spreadsheets, difficult to internally control processes for revenue recognition. Method of recognition can affect: revenue & expenses, net income/loss, balance sheet accounts such as a/r, deferred revenue. Which affects financial ratios such as gross margin, return on se, other profitability ratios. May lead stakeholders such as investors, regulators, management, customers and others to make an incorrect decision. Revenues are recognized when they are earned. Criteria: performance has occurred, amount of revenue can be reasonably measured, collection of payment is reasonably assured, costs required to earn revenue can be reasonably measured. Revenue & related expenses recognized when the critical event occurs.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents