Management and Organizational Studies 3360A/B Chapter Notes - Chapter 6: Revenue Recognition, Fide, Financial Statement

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3360A/B
• Professor: Stacey Hann

Document Summary

Understanding the nature of sales transaction from a business. Information for decision making: bias reporting is both under principles-based accounting and rules based accounting, revenue recognition is one of the main areas of misrepresentation in financial statements. If this information is not available , companies should use their best estimate of what the good or service might sell for as a stand-alone unit. Right of return: companies record the returned asset in a separate account from inventory to provide transparency. Principal-agent relationship: the principal"s performance obligation is to provide goods or perform services for a customer, the agent"s performance obligation is to arrange for the principle to provide these goods or services to a customer. Warranties: two types of warranties, warranties that the product meets agreed-upon specifications in the contract at the time the product is sold, warranties that provide an additional service beyond the assurance-type warranty.