chapter 6 notes.docx

2 Pages
Unlock Document

University of Waterloo
Accounting & Financial Management
AFM 291
Robert Ducharme

Chapter 6 Revenue Recognition Understanding Sales Transactions  Critical to understand from a business perspective what is being given up and what is being received  Accounting for revenue is very complex  Much of the complexity is caused by structure of the sales transactions To properly account for sales transaction accountants must understand the business of the entity and the nature of the  transaction  Key questions for understanding the sales transactions from a business perspective are -> what is being given up? -> what is being received  Normally specified in sales agreements Economics of Business Transaction Basics - Are we selling goods, services or both? What is the physical nature of the transaction Why does this matter for accounting purposes?  Goods -> tangible -> definite point when control over goods sold passes to buyer  Coincides with transfer of possession, and legal title Reciprocal Nature - What is being received? Why does the reciprocal nature of transactions matter for accounting purposes?  Assume transactions are at arm length, given up = value received  Sales agreements specify -> (1) acquired - consideration and (2) given up  Barter (non-monetary transactions) is seen as sale if there is commercial substance  Transaction occurs -> entity's
More Less

Related notes for AFM 291

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.