Week 2 - DQ 1 - What are the different criteria for recognizing revenue

Week 2 - DQ 1 - What are the different criteria for recognizing revenue

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Week 2 – DQ 1 What are the different criteria for recognizing revenue? Response #1 According to SAB 101--GENERAL REVENUE RECOGNITION RULES organizations “should not recognize revenue until is realized or realizable and earned.” Before revenue is recognized, transactions must meet the following criteria: - There is a persuasive evidence of an arrangement. - The seller’s price to the buyer is fixed or determinable. - Delivery has occurred or services have been rendered. - Collectability is reasonably assured. Response #2 According to Kieso, Weygandt, and Warfield, the two conditions for recognizing revenue is when it is 1) being realized or realizable or 2) being earned. The text goes on to say that revenues are realized when goods or services are exchanged by a company for cash or claims to cash. This is different from being realizable which is when a company receives assets that are convertible to understood amounts of cash or claims to cash. Finally, revenue is earned when the company does what it is required to do to in order to lay claim to the revenue. Perhaps
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This note was uploaded on 04/04/2012 for the course ACC 422 taught by Professor Susan during the Spring '08 term at University of Phoenix.

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Week 2 - DQ 1 - What are the different criteria for recognizing revenue

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