Accrual Basis Accounting Revenue

Accrual Basis Accounting Revenue

Instructions/Descriptions

Accrual Basis Accounting Revenue Recognition Principal Discussion

Under the accrual basis accounting, revenues and expenses are recognized by the following principles:

Revenue recognition: Revenue is recognized when both of the following conditions are met: Revenue is earned and Revenue is realized or realizable.

Expense recognition: Expense is recognized in the period in which related revenue is recognized (this is also known as the Matching Principle).

Respond to the following in a minimum of 175 words:

[Order Now]

Discuss when the requirements of the revenue recognition principle are usually met. Give an example.

Discuss when the requirements of the expense recognition principle are usually met. Give an example.

Financial Statements Discussion

This week’s activity illustrates the role a company’s accounting method plays in financial statement reporting. In this assignment, students evaluate the events occurring in a business setting and determine how to properly analyze those events to identify the impact on both cash and accrual accounting methods.

Resources 

Accounting Methods Grading Guide

Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC)

Tutorial help on Excel and Word functions can be found on the Microsoft Office website. There are also additional tutorials via the web offering support for Office products.

[Order Now]

Assignment Steps

Scenario: Bison, a consulting firm, has just completed its first year of operations. The company’s sales growth was explosive. To encourage clients to hire its services, Bison offered 180-day financing – meaning its largest customers do not pay for nearly 6 months. Because Bison is a new company, its equipment suppliers insist on being paid cash on delivery. Also, it had to pay up front for 2 years of insurance. At the end of the year, Bison owed employees for one full month of salaries, but due to a cash shortfall, it promised to pay them the first week of next year.

As the senior accountant, the Chief Financial Officer has asked you to prepare a memo to be sent to management notifying them of the delayed wage payments.

Prepare the memo in a maximum 700 words including the following information to better outline the situation:

[Order Now]

Explain how cash and accrual accounting differs for each of the events listed in the above scenario and describe the proper accrual accounting.

Assess how at the end of the year, Bison reported a favorable net income, yet the company’s management is concerned because the company is very short of cash. Explain to management how Bison could have positive net income and yet run out of cash.

Accrual Basis Accounting Revenue Recognition Principal Discussion

PLACE THE ORDER WITH US TODAY AND GET A PERFECT SCORE!!!