What is the process that a company may follow when recognizing and measuring a transaction that is not currently covered by an existing accounting standard?

1. What are the rules regarding revenue recognition?
2. What are the four criteria for revenue recognition?
3. What five steps are needed to recognize revenue How are donations or contributions handled?
4. When can a company recognize revenue?
5. What are the two general criteria that must be satisfied before a company can recognize revenue?
6. How do accountants decide to recognize revenue?
7. How do sellers measure revenue?
8. Which one of the following is a criterion used in determining when to recognize revenue?
9. What are the events from which prior period may arise?
10. How would you correct a prior period error?
11. What is the treatment of a correction of a prior period error?

What are the rules regarding revenue recognition?

The five steps needed to satisfy the updated revenue recognition principle are: (1) identify the contract with the customer; (2) identify contractual performance obligations; (3) determine the amount of consideration/price for the transaction; (4) allocate the determined amount of consideration/price to the contractual ...

What are the four criteria for revenue recognition?

In this instance, revenue is recognized when all four of the traditional revenue recognition criteria are met: (1) the price can be determined, (2) collection is probable, (3) there is persuasive evidence of an arrangement, and (4) delivery has occurred.

What five steps are needed to recognize revenue How are donations or contributions handled?

The five-step process involves identifying the customer and the contract, identifying the performance obligations, determining the transaction price, allocating the price to the performance obligations, and recognizing revenue when the performance obligations are met.

When can a company recognize revenue?

According to the principle, revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting – in contrast – revenues are recognized when cash is received no matter when goods or services are sold.

What are the two general criteria that must be satisfied before a company can recognize revenue?

According to generally accepted accounting principles, for a company to record revenue on its books, there must be a critical event to signal a transaction, such as the sale of merchandise, or a contracted project, and there must be payment for the product or service that matches the stated price or agreed-upon fee.

How do accountants decide to recognize revenue?

The cash method of accounting recognizes revenue and expenses when cash is exchanged. For a seller using the cash method, revenue on the sale is not recognized until payment is collected. Just like revenues, expenses are recognized and recorded when cash is paid.

How do sellers measure revenue?

A simple way to find sales revenue is by multiplying the number of sales and the sales price or average service price (Revenue = Sales x Average Price of Service or Sales Price).

Which one of the following is a criterion used in determining when to recognize revenue?

Which ONE of the following is a criterion used in determining when to recognize revenue? - Before recognizing revenue, all dividends must have been collected in cash. - Before recognizing revenue, cash must have been collected, or, alternatively, collection must be reasonably assured.

What are the events from which prior period may arise?

Prior period errors are omissions from, and misstatements in, an entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that was available and could reasonably be expected to have been obtained and taken into account in preparing those statements.

How would you correct a prior period error?

You should account for a prior period adjustment by restating the prior period financial statements. This is done by adjusting the carrying amounts of any impacted assets or liabilities as of the first accounting period presented, with an offset to the beginning retained earnings balance in that same accounting period.

What is the treatment of a correction of a prior period error?

Unless it is impracticable to determine the effects of the error, an entity corrects material prior period errors retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred.