University:
Widener University
Course:
COMPSCI 345 | Practice and Applications of Data Management
Academic year:

2023
Views:

144

Pages:

3
Author:

Hayley Allen

RECITATION SESSION 3: REVENUE RECOGNITION, A/R CONCEPTS AND INVENTORY VALUATION Agenda 1. 2. 3. 4. Review of Revenue Recognition A/R Concepts and Inventory Problems Questions Revenue Recognition KEY QUESTIONS • Has revenue been earned? • e.g. warranty, deferred revenue/income, discounts, price protection policies • If sales are on credit, is the cash collectible? CRITERIA FOR REVENUE RECOGNITION • A significant portion of the production and sales effort has been completed • The amount of revenue can be objectively measured • The major portion of the costs has been incurred, and the remaining costs can be reasonably estimated • The eventual collection of cash is reasonably assured Inventory P COGS 1 InvEB = InvBB + P – COGS COST FLOW ASSUMPTIONS InvBB InvBB InvEB or InvEB LIFO COGS or FIFO COGS Averaging (1) Specific Identification Used when specific products can be tracked (e.g. cars) (2) FIFO: First In, First Out Cost of goods sold are assumed to be equal to the costs of the oldest available units in the financial records (3) LIFO: Last In, Last Out Cost of goods sold are assumed to be equal to the costs of the most recently purchased units in the financial records (4) Averaging COGS are assumed to be equal to a per-unit weighted average cost at the end of the period 1 Purchases, production