BUS 254 Lecture Notes - Revenue Recognition, Net Income, Matching Principle

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Masood Kamlani

Document Summary

Chapter 4: revenue recognition and statement of earnings. Revenue recognition is important since it is often the largest dollar amount on income statements and. Net income is the difference between revenues and expenses. The matching principle states that expenses must be recognized in the same accounting period as the revenue earned. The performance has been achieved: the risks and rewards are transferred and/or the earnings process is substantially complete with respect to the sale, the amount earned can be measured. There is reasonable assurance of the collectability of the amount earned. Revenue recognition at the time of contract signing.