Chapter 10 Power Point

Chapter 10 Power Point - Chapter 10 Auditing Revenue...

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Chapter 10 Prepared by Adrianne E. Slaymaker, D.B.A., CPA Auditing Revenue Processes: Sales, Billing, and Collection in the Health-Care Provider and Retailing Industries
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OVERVIEW Learning Objective #1 The revenue and collection function is fundamental to the primary productive activity of any enterprise, and the revenue cycle interacts with and depends on other cycles. Revenue comes from the sale of goods (retail store) and/or services (health care). Typical transaction activities for sales, billing, and cash receipts are as follows. Cash receipts Sales for cash and for accounts receivable Sales returns and allowances Writing off uncollectible accounts receivable Estimating bad debt expense
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RETAILING Learning Objective #1 A retail entity’s primary business activity is selling finished goods inventory to a customer for cash or on credit. The simplest retail transaction is one for cash, in which the customer exchanges cash for goods at the point of sale.
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HEALTH-CARE PROVIDERS Learning Objective #1 Health-care providers sell a service. Health-care providers in the United States are often paid by third-party payers in addition to or instead of the patient who receives the service. Accounting controls for billing are especially important because, under a fee-for-service plan, the insurance company typically pays the health-care provider based on a contract rate for a particular medical treatment or diagnosis . An alternative to a fee-for-service plan is a capitation agreement.
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Inherent Risks in Revenue & Collection Improper Revenue Recognition Cut-off Bill and Hold Channel Stuffing Collectability of Receivables Transfer of ownership
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Revenue Recognition AICPA 1. TRANSFER OF OWNERSHIP 2. COLLECTION IS ASSURED 3. LIMITED, MEASURABLE RIGHT OF RETURN FASB (1) realized or realizable (2) earned
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Revenue Recognition SEC guidance (SAB 104) Persuasive evidence of an arrangement exists, Delivery has occurred or services have been
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This note was uploaded on 02/22/2012 for the course ACCT 512 taught by Professor Slaymacker during the Spring '12 term at Globe.

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Chapter 10 Power Point - Chapter 10 Auditing Revenue...

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