5. "Revenue is recognized when a sale transaction is made or when services are rendered. Cost is to be recorded when they are incurred" on the basis of this statement what will be the treatment of the followings in the books of account of a company, also justify the answers with suitable examples. (i) Money received for a sales order but nọ şalęs are made? (ii) Şales are made but no cash is received? (iii) Çost is incurred by the company but no money is paid. (iv) Cost is paid for services to be received later on,

5. "Revenue is recognized when a sale transaction is made or when services are rendered. Cost is to be recorded when they are incurred" on the basis of this statement what will be the treatment of the followings in the books of account of a company, also justify the answers with suitable examples. (i) Money received for a sales order but nọ şalęs are made? (ii) Şales are made but no cash is received? (iii) Çost is incurred by the company but no money is paid. (iv) Cost is paid for services to be received later on,

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 4CYBK

See similar textbooks

Similar questions

Which of the following is the principle that a company must recognize revenue in the period in which it is earned; it is not considered earned until a product or service has been provided? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principle
Which of the following is not a criterion to recognize revenue under GAAP? A. The earnings process must be completed. B. A product or service must be provided. C. Cash must be collected. D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.
Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a company satisfies its performance obligations and expenses are recorded when incurred. Accrual-basis accounting records both cash and noncash transactions when they occur. Generally accepted accounting principles require companies to use cash-basis accounting. The key elements of accrual-basis accounting are the revenue recognition principle, the expense recognition principle, and the historical cost principle.
At what point does revenue recognition occur? A. When the purchase order is received B. When the seller receives the money for the job C. When the seller has met performance D. When the purchaser makes payment
Before revenue can be recognized, the revenue recognition principle requires the _____. A. Product to be shipped B. Cash to be transferred C. Service to be booked D. Performance obligation be fulfill
29)Revenue is properly recognized: (Hint: What is Revenue Recognition principle?) Group of answer choices At the end of the accounting period. Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. Only if the transaction creates an account receivable. When the customer's order is received.
Activity 1: Sales revenue should be recognized when goods and services have been supplied; costs are incurred when goods and services have been received. Which accounting concept governs the above? A.The substance over form concept B.The materiality concept C.The accrual concept D. The historical cost concept
Which of the following is not a revenue account? a. Professional fee b. Interest income c. Cost of Sale d. Sales
When recognizing revenue, a company has a performance obligation when it agrees to a. perform a service for a customer and receives cash payment O b. sell a product to a customer after receiving payment O c. receives cash payment O d. perform a service or sell a product to a customer
Which of the following is NOT a financial transaction? a. purchase of products b. cash receipts c. update valid vendor file d. sale of inventory
Using accrual accounting, when is revenue recognized?A. When cash transfers B. When the performance obligation is fulfilled C. When products is received FOB shipping point D. When the products is shipped FOB destin
Revenue is recorded when services have been performed or products have been delivered to customers. The accounting prin supporting this reporting is a. the adjusting principle. b. the income statement principle. O c. the cash basis principle. O d. the revenue recognition principle.