RSM219H1 Chapter Notes - Chapter 4: Financial Statement, Earnings Before Interest And Taxes, Weighted Arithmetic Mean
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RSM219H1 Full Course Notes
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Document Summary
Revenue recognition and the statement of income: quantity: amount of revenue, quality: source of revenue, sustainability, different companies recognize revenue differently, measured at fair value, measuring bundled sales. Price agreed upon by buyer and seller. Part product, part service: how to measure bartered goods. No cash to measure value with: gross margin = gross profit/revenue, profit margin = net income/revenue. Sales discount: discounted price if buying now instead of later, record sales discount into contra-revenue account. Report final net sales on income statement. Based on historical percentage: sales returns and allowances account, help management evaluate product quality. Other common points include time of production, collection, after collection, other time. Common to all types of revenue: probable that economic benefits will flow to company, amount of benefits reliably measured. Sales of goods: risks, rewards transferred to buyer, no continued involvement/control over goods. Shipping good, return policy: costs incurred reliably measured. Return costs, warranty costs, default on credit sales.
