Accounting chapter 3

Accounting chapter 3 - Accounting chapter 3 Income...

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Accounting chapter 3 Income statement Summarizes operating activities Revenues and expenses Reports on profitability Revenue recognition: when do we recognize revenue? Accrual basis vs cash basis Accrual : Not concerned when cash changes hands Cash basis: timing Revenue recognition criteria: 1. Risks + awards of ownership have transferred to customer 2. able to measure revenue measurability of revenue is certain 3. collectability is reasonably assured record revenue revenues in periods when earned (1, 2 and 3 are all met at point of sale (merchandiser))
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