Class 10_18 & 19_10 - Ch 6

Class 10_18 - Agenda Questions Pick up your test if you havent already Quizzes begin this week First will be due tomorrow night at midnight Page 1

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Page 1 Questions? Pick up your test if you haven’t already Quizzes begin this week First will be due tomorrow night at midnight Agenda
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Page 2 As we move forward, we’ll be adding to the concepts we’ve learned earlier Remember, we discussed when revenues show up on the income statement – when earned (4 conditions are met) 1. Delivery has occurred (FOB Shipping / FOB Destination) 2. Persuasive evidence of an arrangement for payment 3. The price is fixed or determinable 4. Collection is reasonably assured Let’s build on revenue We’ve looked at booking revenue in simple terms To date, a sale has been for credit and/or cash What happens with most businesses? Focusing on Revenue, Receivable & Cash
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Page 3 Companies often sell direct to customers for cash or credit cards What happens when a company makes a sale for cash for $1,000? Cash $1,000 Revenue $1,000 What happens when they make a sale on a credit card for $1,000? Credit card companies pay quickly so is it the same as a cash sale? Do you think credit card companies provide their service for free? They charge fees to companies as a % of sales – let’s say 3%. So, is a cash sale for $1,000 the same as a $1,000 sale on a credit card? We must account for the credit card discount ($1,000*3% = $30). Cash $970 Discount – Credit Card $30 Revenue $1,000 This discount is a contra–revenue account. Therefore, it reduces what is shown as revenue on the income statement. Revenue shown Focusing on Revenue, Receivable & Cash
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This note was uploaded on 12/17/2010 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas at Austin.

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Class 10_18 - Agenda Questions Pick up your test if you havent already Quizzes begin this week First will be due tomorrow night at midnight Page 1

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