Question: Revenue on an accrual accounting basis must be both earned and
Revenue on an accrual-accounting basis must be both earned and realized (or realizable) before accountants recognize it in the income statement. Companies recognize revenue in cash-basis accounting only when they have received the cash. Is an accrual-basis or cash-basis recognition of revenue more relevant for evaluating the performance of a sales staff? Why?
Answer to relevant QuestionsThe FASB and IASB both state that relevance and faithful representation are crucial concepts for financial reporting. Why are these concepts so important?Compute the unknowns (X, Y, Z, A, and B) in each of the individual cases, columns 1–7, in Exhibit 15-8. Each column is independent of the others.Google Inc. is a well-known Internet company. The following data are from its financial statement for the year ended December 31, 2011 (in millions):1. Prepare Google’s income statement for the year. The final three lines ...Nordstrom operates 207 fashion specialty retail stores in 28 states. The company’s actual data (slightly simplified) follow for its fiscal year ended January 29, 2011 (in millions of dollars):Assets, beginning of period ...“In applying the lower-of-cost-or-market method to inventories, inventory values are written down when replacement cost falls. If the replacement cost then increases, inventory values are written up, but not to an amount ...
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