Which of the following activities are part of the fasbs required revenue recognition process?
WHY DID THE FASB ISSUE A NEW STANDARD ON REVENUE RECOGNITION?Revenue is one of the most important measures used by investors in assessing a company’s performance and prospects. However, previous revenue recognition guidance differs in Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)—and many believe both standards were in need of improvement. Show
On May 28, 2014, the FASB and the International Accounting Standards Board (IASB) issued (press release) converged guidance on recognizing revenue in contracts with customers. The new guidance is a major achievement in the Boards’ joint efforts to improve this important area of financial reporting. Presently, GAAP has complex, detailed, and disparate revenue recognition requirements for specific transactions and industries including, for example, software and real estate. As a result, different industries use different accounting for economically similar transactions. The objective of the new guidance is to establish principles to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue from contracts with customers. The new guidance:
The objective of the new guidance is to establish principles to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue from contracts with customers. Continue to Full Project Information WHAT IS THE CORE PRINCIPLE OF THE NEW STANDARD?To meet that objective, the new guidance establishes the following core principle: Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. A company should apply the following five steps to achieve the core principle:
Continue to Full Project Information WHO WILL BE AFFECTED BY THE NEW GUIDANCE? The new guidance on revenue recognition affects any reporting organization that either enters into
contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). WHAT IS THE JOINT TRANSITION RESOURCE GROUP (TRG)?On June 3, 2014, the FASB and the IASB announced the formation of the Joint Transition Resource Group for Revenue Recognition (TRG). The TRG informed the IASB and the FASB about potential implementation issues that could arise when companies or organizations implemented the new standard. The TRG also provided stakeholders with an opportunity to learn about the new standard from others involved with implementation. The TRG did not issue guidance. Members of the TRG included financial statement preparers, auditors, and users representing a wide spectrum of industries, geographical locations and public and private companies and organizations. The TRG met twice in 2014, four times in 2015, and met twice in 2016. All meetings were public and co-chaired by the vice chairmen of the FASB and the IASB. The 2016 TRG meetings were FASB only, with the IASB participating as an observer. Continue to TRG WHEN WILL THE FINAL ACCOUNTING STANDARDS UPDATE BE EFFECTIVE?On August 12, 2015, the FASB issued an Accounting Standards Update (ASU) deferring the effective date of the new revenue recognition standard by one year. Based on the Board’s decision, public organizations* should apply the new revenue standard to annual reporting periods beginning after December 15, 2017. That ASU required that Nonpublic organizations should apply the new revenue standard to annual reporting periods beginning after December 15, 2018. On June 3, 2020, the FASB issued an Accounting Standards Update (ASU) deferring the effective date for certain entities that had not yet issued their financial statements (or made financial statements available for issuance) reflecting the adoption of Revenue, as of the date the ASU was issued. Public organizations should apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2017 (that is, a public organization is required to apply the new revenue standard beginning in the first interim period within the year of adoption). Nonpublic organizations should apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2019 (that is, a nonpublic organization is not required to apply the new revenue standard in interim periods within the year of adoption). Additionally, the Board decided to permit both public and nonpublic organizations to adopt the new revenue standard early, but not before the original public organization effective date (that is, annual periods beginning after December 15, 2016). A public organization should apply the new revenue standard to all interim reporting periods within the year of adoption. A nonpublic organization is not required to apply the new revenue standard in interim periods within the year of adoption. *A public organization is an organization that is any one of the following:
Continue to Full Project Information Which of the following activities is not one of the FASB's required revenue recognition activities?Which of the following activities is NOT one of the FASB's required revenue recognition activities? Although the ultimate goal of generating a sale is to collect cash from a customer, the act of collecting the cash is not required in order to recognize revenue.
Which of the following accounts is not included in the revenue cycle?Which account is generally NOT considered a part of the revenue cycle? The inventory account is not typically viewed as part of the revenue cycle.
Which of the following cycles consists of a set of activities designed to acquire goods and services for use in the organization's operations?The expenditure cycle is the set of activities related to the acquisition of and payment for goods and services.
What is the revenue recognition principle quizlet?The revenue recognition principle requires that revenue must be recorded at the time the duties are performed, regardless of when the cash is received. Matching Principle. The matching principle states that an expense must be recorded in the same accounting period in which it was used to produce revenue.
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