The Accounting Onion, a very good US accounting blog,7 critically reviews the revenue recognition policy of a
Question:
The Accounting Onion, a very good US accounting blog,7 critically reviews the revenue recognition policy of a for profit university and provides an extract from the policy as follows;
Students are billed on a course-by-course basis. They are billed on the first day of attendance, and a journal entry is made to debit Accounts receivable A/R and credit deferred revenue for the amount of the billing. The A/R is ultimately adjusted by an allowance for uncollectible accounts of around 30%, and deferred revenue is recognized pro rata over the duration of the course.
Assuming the courses (subjects) go from September to February while the financial year ends on 31 December, discuss whether the policy is appropriate.
Step by Step Answer:
Financial Accounting And Reporting
ISBN: 9781292255996
19th Edition
Authors: Barry Elliott, Jamie Elliott