Recognizing Revenue and Expenses
When is income earned?
Cash versus Accrual Accounting
Cash basis accounting
Measures cash flowvery important to an enterprise.
Recognize revenue when cash is received.
Recognize expenses when cash is paid.
Problem: Statement of Cash Flows, Kelly Company
A two year comparative balance sheet and income statement for Kelly Company follow:
December 31, 2012, and 2011
Harnischfeger Case Analysis
Identify all the accounting policy changes and accounting estimates that
Harnischfeger made during 1984. Estimate, as accurately as possible, the effect
of these changes on the companys 1984 reported profits.
Hilton Manufacturing Company
1. If we divested product 103, it would:
decrease sales by $5,200
b. Decrease expenses by:
b.i. $88 for compensation insurance
b.ii. $1300 for direct labor
b.iii. $946 for materials
b.iv. $68 for
Kayla R. Green
1) Identify all the accounting policy changes and the accounting estimates that Harnischfeger
made during 1984. Estimate, as accurately as possible, the effect of these on the companys 1984