PowerPoint - Ch.3

The indicates what the normal balance in the account

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Unformatted text preview: evenues & Expenses S ale s Co s ts 3-25 BIG HINT FOR EXAM! • EXIBIT 3.4 on P.114 – Memorize this chart, put it on cheat sheet. • The “+” indicates what the normal balance in the account is (for example Assets normally have a “debit” balance) 3-26 Revenue Principle (Revenue Recognition) What are the 4 rules // criteria that need to What are the 4 rules criteria that need to be met? be met? (1) (1) (2) (2) (3) (3) (4) (4) 3-27 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 reasonably assured. (4) Collection is reasonably assured. 3-28 Revenue Principle When the cash is received the ACCOUN...
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