Question

Revenue may also be recognised overtime. Give one example of business activities in which revenue is...

Revenue may also be recognised overtime. Give one example of business activities in which revenue is recognised over time. Explain the rationale in recognising revenue over time instead of the point of sale basis.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Revenue is recognized over time in cases where the contract of sale or service is spread over a longer period i.e. more than one financial year. One most suitable example of revenue recognition over time would be involving construction contracts where in the contracts usually spread over 4-5 financial years. In these type of contracts, the revenue is recognized either on the basis of completion of contract. The revenue to be recorded is based on the percentage of completion. The rationale behind this method of recognition is to meet the matching principle i.e. matching revenue with costs and also ownership basis. Revenue is recognized only when the physical ownership of the asset is transferred or the service is totally completed. This is done to ensure that the cash collectibility is reasonably assured and follows the matching principle.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
give an example of a business and the type of revenue strategy they are using to...
give an example of a business and the type of revenue strategy they are using to earn revenue. Ex: low pricing, freemium, or unit sales.)Explain your example and how it applies to the revenue model.
Governments often have services that operate much like a for-profit business. Give an example of one...
Governments often have services that operate much like a for-profit business. Give an example of one of these activities, and tell us what type of fund or funds it uses?   please add references and cite your sources
-Financing activities is defined as: The principal revenue-generating activities of an organization and other activities that...
-Financing activities is defined as: The principal revenue-generating activities of an organization and other activities that are not investing or financing; any cash flows from current assets and current liabilities Cash flows from the acquisition and disposal of long-term assets and other investments not included in cash equivalents Cash flows that result in changes in the size and composition of the contributed equity and borrowings of the entity (i.e. bonds, stock, cash dividends) All of the above. -Income statement reflect...
Which one of the following is the definition of operating cash flow? Multiple Choice revenue minus...
Which one of the following is the definition of operating cash flow? Multiple Choice revenue minus expenses cash realized from the sale of assets cash flow originating from the issuance of securities cash generated by a firm's normal business activities pre-tax income
V=IR is Ohm’s law, explain and give a practical example of each variable. Which one of...
V=IR is Ohm’s law, explain and give a practical example of each variable. Which one of the variables can do harm when in direct human contact?
V=IR is Ohm’s law, explain and give a practical example of each variable. Which one of...
V=IR is Ohm’s law, explain and give a practical example of each variable. Which one of the variables can do harm when in direct human contact?
Question 2 You are currently trying to decide between two cost structures for your business: one...
Question 2 You are currently trying to decide between two cost structures for your business: one that has a greater proportion of short-term fixed costs and another that is more heavily weighted to variable costs. Estimated revenue and cost data for each alternative are as follows: Cost Structure Alternative 1 Alternative 2 Selling price per unit $ 50 $ 50 Variable cost per unit 35 30 Short-term fixed costs per year 40,000 45,000 Required: 1. What sales volume, in units,...
1.Explain the difference between deterministic and stochastic user equilibrium with an example. Which one is more...
1.Explain the difference between deterministic and stochastic user equilibrium with an example. Which one is more realistic and why? 2.Explain with an example why an activity based model is a better representative of daily urban travel than a four-step model. 3.The system utilities for Public Transit (PT) and Car (C) mode are: Vc = 0.238 – 0.350TTc Vpt = -0.531TTpt Calculate the probability of choices for following trips: Trip Travel Time Car (TTc) Travel Time Public Transit (TTpt) 1 5...
Ross’s Lipstick Company’s long-term debt agreements make certain demands on the business. For example, Ross may...
Ross’s Lipstick Company’s long-term debt agreements make certain demands on the business. For example, Ross may not purchase treasury stock in excess of the balance of retained earnings. Also, long-term debt may not exceed stockholders’ equity, and the current ratio may not fall below 1.50. If Ross fails to meet any of these requirements, the company’s lenders have the authority to take over management of the company. Changes in consumer demand have made it hard for Ross to attract customers...
1. Explain and give examples of the 5 existing business model patterns. 2. Can the business...
1. Explain and give examples of the 5 existing business model patterns. 2. Can the business below use that business model pattern? Explain. Overview- We are going to start a bakery business as I have my interest in bakery. This is going to be start-up business plan. The name of our Bakery would be “Bake It or Make It”. It would be managed by me along with my team of new bakers around the city. Opening a bakery at initial...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT