group 5 answers

group 5 answers - GROUP 5 Question 1 Revenues are...

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GROUP 5 Question 1. Revenues are recognized when they are 1) realized or realizable and 2) earned. This principle does not care when cash is received. If you own a magazine that puts out a new issue every month then this principle applies when you accept new subscriptions. Customers will send you money for an entire year even though you have not shipped the actual magazines yet. According to the revenue recognition principle you would not be able to report that money that you received as income. This is because only one of the two requirements has been met. Since you have the cash in hand then the revenue is realized, but since you have not mailed any magazines you have not earned the revenues. Therefore you cannot recognize the money you receive as revenues. Exceptions: Long-term contracts (percentage of completion versus completed contract method). Cost Recovery method. Question 2. An adverse opinion occurs when financial statements issued by a company aren’t in conformity with GAAP. This can happen when the financial statements issued do not
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  • Fall '10
  • Shubin
  • Generally Accepted Accounting Principles, International Financial Reporting Standards, adverse opinion, Cost recovery method

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group 5 answers - GROUP 5 Question 1 Revenues are...

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