Week 6-2

Week 6-2 - Econ/Mgmt4Spring2010 Week62 AccountingChoices...

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Econ/Mgmt 4 Spring 2010 Week 6-2 Accounting Choices Ugly Puppy Period #1
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Conservative Choices “CONS” Recognizing revenue when (a) the service is provided  (not before) (b) customers know the price, and  (c)  when cash is collected or its collection is reasonably  certain. Expense recognition - costs that are associated with  revenue recognition – matching. LIFO for COGS, thus FISH ( first in still here ) for  Inventory value. Expensing – not capitalizing - most costs.
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Aggressive Choices “AGG” Recognizing revenue when cash is received  (a) the  service is provided (not before) (b) customers know  the price, and (c) when cash is collected. Expense recognition of costs when service is provided  or cash is received.  FIFO for COGS, thus LISH ( last in still here ) for  Inventory value. Capitalizing – and Amortizing - big costs.
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Same Treatment for both “AGG” and  “CONS”?  Interest expense. Most routine costs will be recognized as ordinary, i.e.  direct, indirect, or periodic expenses -  such as  commissions, rent, telephone, travel, advertising (some  overhauls).   Pre-paid expenses. Paying vendors, employees, banks.
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1 st  Period Events    Sell  $200 in   stock to capitalize the Company. Buy   an Ugly Puppy for $100 cash. Buy 
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This note was uploaded on 06/06/2010 for the course MGT 181 taught by Professor Jordan during the Spring '08 term at UCSD.

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Week 6-2 - Econ/Mgmt4Spring2010 Week62 AccountingChoices...

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