Revenue recognition is significant because it not only defines to the leaders of the company that the product sold is doing well in its markets but also that the price on the product is comparable to the competition - shown through the return of high premiums and that all expenses to make said product are being received through the sale of these products. "Process of recording revenue, under one of the various methods, in the accounting period. In the period of revenue recognition, related expenses should be matched to revenue. The most often used method of recognizing revenue is at the time of sale or rendering of service. The cash basis of revenue recognition is also popular among service businesses. Other methods of revenue recognition include during production and at the completion of production" (Barron's Accounting Dictionary, 2010). Revenue recognition should be offset by the expenses involved in producing the product from materials and labor to all other overhead expenses along with profits that were involved in making said product. The allotted time would depend on those researching the data and could follow the idea of monthly revenue recognition to weekly, depending on what particular information is being monitored and what leaders are hoping to achieve from measuring this information. Determining the expenses for the products before being sold would be one factor of revenue recognition that would support and make sure the company is selling the product for a price that is not only competitive in the markets but also profitable for the company, covering expenses involved...
Once the product is sold and compared to the expenses involved or matched with these expenses, then these amounts would be recorded for accounting purposes (Friedlob and Plewa, 1996).
Revenue Recognition Revenue is a mode of taxation that is charged by the central governing authority for the purpose of generation income for the government. Revenue is charged on various items from the companies or on businesses that are conducted within the jurisdiction of the ruling authority (Bragg, 2010). Revenue generation is a process that is crucial as it touches on the income and profit made by the body that is
Accounting Concepts Revenue Recognition: Its Relevance and Significance In the words of Kimmel, Weygandt and Kieso (2008), "the revenue recognition principle requires that companies recognize revenue in the accounting period in which it is earned." Unlike is the case in the cash basis of accounting, revenue under the accrual accounting basis is recognized on the sale of a certain commodity or the performance of a given service. Under the cash basis
Accounting Case Revenue recognition is a significant issue for several interrelated reasons. Appropriate guidelines for determining when revenue is recognized can keep companies from inflating their profits and boosting their apparent standing as well as establish criteria that makes it more difficult for companies to hide revenue for tax saving purposes or other reasons (Investopedia 2011). Generally speaking, revenues are recognized when payment is received for the rendering of services or
Jet Blue Case StudyWill the new revenue standard provide more decision-useful information than prior U.S. GAAP?Generally speaking, revenue recognition is the process of recording revenue in a company\\\'s accounting records. However, there are different ways to approach revenue recognition, and each perspective may slightly alter the way that revenue is recorded. For example, the cash basis approach simply records revenue when cash is received, regardless of when the product or
Expensing of Stock Options Expensing of stock options is a far more complicated issue. The Federal Accounting Standards Board (FAS) strongly recommends expensing of options and is trying to make it a legal requirement (Rash, 2004). The pros of expensing options include providing a level playing field so that companies that use cash bonuses and companies that use stock options each have an expense on the income statement (McPeak). and, some believe
GAAP is a set of specific common guidelines, provided by the institutions such as the Financial Accounting Standards Board, the American Institute of Certified Public Accountants and the Securities and Exchange Commission, about "acceptable accounting practices" These acceptable practices should not necessarily be regarded as a set of ground rules. In fact, it is a common denominator, useful when foreign firms, especially auditing companies, proceed to financial verifications. The GAAP provide
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