PowerPoint - Ch.3

Cash basis not gaap revenue is recorded when cash is

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Unformatted text preview: w Are Operating Activities Recognized and Measured? Cash Basis NOT GAAP!!! Revenue is recorded when cash is received. 3-13 Expenses are recorded when cash is paid. How Are Operating Activities Recognized and Measured? Accrual Accounting Assets, liabilities, revenues, and expenses should be Assets, recognized when the transaction that causes them occurs, not necessarily when cash is paid or received. not Required by Generally Acceptable Accounting Principles 3-14 Revenue Principle (Revenue Recognition) Recognize revenues when the “earnings” Recognize revenues when the “earnings” process is complete: process is complete: (1) Delivery has occurred or services have (1) Delivery has occurred or services have been rendered. been rendered. (2) There is persuasive evidence of an (2) There is persuasive evidence of an arrangement for customer payment. arrangement for customer payment. (3) The price is fixed or determinable. (3) The price is fixed or determinable. (4) Collection is reasona...
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