Week 9-1 - GAAPMethods Week9.1 RevenuesandCosts Expenses...

Info icon This preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
GAAP Methods Week 9.1
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Revenues and Costs Realization and Matching    Profits are the difference between Revenues and  Expenses.  A. Revenue - according to the Realization Principle. When the reward is:  (1) Earned and (2) Collectible B.When do Costs become Expenses? (1) When they help, or (2) hinder Revenues.
Image of page 2
Front versus Back Office Activities    Front – operations that affect profits. Back – transactions that support  operations.
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Capitalizing  vs. Expensing a Cost If the cost of a large purchase is “expensed” then  this will lower profits “this” period. If such costs were  capitalized , then a fraction of  the cost will be “expensed” (depreciation expense)  this period and the same fraction next period, and  so on. The Aggressive choice would be to capitalizing as  many costs as  could qualify for such treatment and  do so for as many periods as arguable.
Image of page 4
Costs that would not be Capitalized Costs for items that would be used-up shortly. Routine costs. Costs for items that may not ( uncertainty   regarding) benefit sales in future periods Example .   A $50 Parking Pass that authorizes 10 days of parking.
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern