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Accounting for Managerial Decision Making - Revenue recognition methods.
Member rating: No Rating | Words: | Submitted: Wed Sep 08 2004
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Running head: RECOGNITION POSITION PAPER AND SUGGESTED METHODS Recognition position paper Week 5 ACC/539 Accounting for Managerial Decision Making Instructor: Robert Bailey September 7, 2004 Jay Ainsworth, Pamela Brasher, Ernesto Fernandez, Shawnna Paine Revenue recognition methods Revenues are defined as inflows of cash or increases in other assets, or settlement of liabilities, during a period from delivering or producing goods, rendering services, or performing other activities that constitute the entity's major operations" (Marshall, p.310). Although there are several methods for recognizing revenues, the FASB provides two criteria used as guidance for recognizing revenue: realization and earned. Realization means when cash is received for a product or service. Revenue is realized when the cash is received. In the earned method, revenue is recognized at the completion of the revenue generating activity. These two methods are satisfied when the product is sold or the service is rendered. There are several methods of recognizing revenues. The standard recognition methods include the...
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