ACC 421 W2 DQs - ACC 421: Week 2: Discussion Questions DQ #...

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ACC 421: Week 2: Discussion Questions DQ # 1 1. What are the different criteria for recognizing revenue? The different criteria for recognizing revenue when revenue is realized, when revenue is earned, when cash is received, and at the end of production (or end of services completed). 2. Why are there so many revenue recognition methods? There are so many revenue recognition methods because company differ, thus one basic recognition method will not work for every company. For example a company who provides a service could not recognize revenues for the sale of products; they would instead recognize service revenue. 3. Why is it so subjective and what are the implications to the quality of the income statement? Income statement quality may decrease due to revenue recognition subjectivity. Comparing one company’s income statements to another company’s income statements can be confusing due to each of the companies using a different revenue recognition method. It also may be hard for a company to decide what revenue recognition method will work best for that company, thus a company needs to be very careful in its decision of recognition of revenue and what method they will use.
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DQ # 2 What are the differences between regular and irregular items on an income
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ACC 421 W2 DQs - ACC 421: Week 2: Discussion Questions DQ #...

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