Accounting Ch9 part1

Accounting Ch9 part1 - Chapter 9: The Income Statement and...

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Chapter 9: The Income Statement and the Statement of Cash Flows FASB defines revenues as “inflows or other enhancements of assets of an entity or settlement of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.” To be recognized, revenues must be realized or realizable and earned. Realization means that the product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash or claims to cash. Earned means that the entity has completed, or substantially completed, the activities it must perform to be entitled to the revenue benefits (the increase in cash or some other asset, or the satisfaction of a liability). Revenue is recognized when the product is delivered or the service is performed: A: (+Cash, or Accounts Receivable), R: (+Sales or Service Revenue). Sales is the term used to describe the revenues of firms that sell purchased or
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This note was uploaded on 03/02/2011 for the course ACCT 502 taught by Professor Jaggi during the Fall '10 term at Rutgers.

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Accounting Ch9 part1 - Chapter 9: The Income Statement and...

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