MGT120H5 Chapter Notes - Chapter 3: Deferral, Asset, Accrual
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MGT120H5 Full Course Notes
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Document Summary
Cash-basis accounting we record the transactions involving receipt or payment of cash and ignores everything else. Accrual accounting the receipt or payment of cash is irrelevant to deciding whether a business transaction should be recorded. What matters is whether the company has gotten an asset, earned revenue, taken a liability or incurred an expense. Cash-basis accounting does not provide a true depiction of the company. Cash-basis does not stay consistent with the conceptual framework. Revenue (ifrs) the gross inflow of economic benefits primarily through sale of goods and services. Conditions for recognizing revenue: customer or service has been provided. Control and benefits of the goods have been transferred to the. Amount of revenue can be reliably measured. It is probable that the business will receive the economic benefit which usually comes in the form of a cash receipt. Conditions for recognizing an expense: by a decrease in an asset or increase in a liability.
