BUSA 100 Study Guide - Midterm Guide: Contract, Financial Statement, Income Statement
Document Summary
The entire amount received from the customer is included as revenue. Cost of supplies is listed as a payment to supplier under cost of sales. This method is used when the organization is the primary obligor. The commission on the sale is recorded as revenue. This method is used when the organization is not the primary obligor, but simply a vendor. Income statement, and n = revenue expenses. It describes the financial position of the company. It describes the performance of a company over a set interval, usually a year or a financial quarter. Found in the balance sheet, it is calculated through assets = liabilities + equity. What are the three requirements of proper revenue recognition: performance is achieved, measurability is reasonably assured, collectability is reasonably assured. Revenue recognition example: you buy an avengers dvd at hmv. The best answer is when you get the dvd (performance criterion). Revenue recognition example: you bought sam smith tickets that are refundable.
