RSM219H1 Chapter Notes - Chapter 4: Cash Flow, Financial Statement, Gross Profit
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RSM219H1 Full Course Notes
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Chapter 4 - revenue recognition and the statement of income. Revenue: inflows of economic benefits from a company"s ordinary operating activities. Result in inflows such as cash or a/r. Generated by transactions a company normally has with its customers. Quantity - amount of revenue & whether or not the trend shows an increase/decrease over accounting periods by measuring growth. Quality - source(s) of revenue & the company"s ability to sustain the venue over longer term by assessing the source of growth (e. g. same-store sales growth) & how closely revenue growth corresponds w/ cash flow from operating activities. Companies have different revenue recognition policies --- companies must disclose information about this in the notes of the financial statements. General revenue recognition criteria -- revenue is earned when: It is probable that economic benefits will flow to the company. The amount of these benefits can be reliably measured. Revenue is recognised at the time of the sale (most times)
