contributions should be recognized as revenue in a restricted fund when the contribution (even if only a pledge) is received. Expenses should be recognized in an unrestricted fund when the funds are used. As the contributions are used, the restrictions are met, and the resources are released from the restricted to the unrestricted categories. The FASB reasoned that donors control only how contributed resources may be used. They do not control the timing of expenses or the specific activities in which
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CRS provides a topically organized structure that is subdivided into topic, subtopics, sections, and paragraphs. The nine content areas located in the FASB Codification System are: General Principles, Presentation, Assets, Liabilities, Equity, Revenue, Expenses, Broad Transactions, and Industry. Presentation offers some guidance on the income statement preparation, calculations of earnings per share, notices to the financial statements, etc. An Asset section will provide information in regards
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Growing Pains at Groupon As an undergraduate music major at Northwestern University, Andrew Mason eagerly sought a version of rock music that would fuse punk with the Beatles and Cat Stevens. Little did he imagine that within ten years he would be the CEO of one of history’s fastest growing businesses. After Northwestern and faded dreams of rock stardom, Mason, a self-taught computer programmer, was hired to write code by the Chicago firm InnerWorkings. InnerWorkings was founded in 2001 by Eric
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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 07 Revenue and Collection Cycle “What at first was plunder assumed the softer name of revenue.” Thomas Paine 7-2 Learning Objectives 1. Discuss inherent risks related to the revenue and collection cycle with a focus on improper revenue recognition 2. Describe the revenue and collection cycle, including typical source documents and control procedures. 3. Give examples of tests
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2012, pretax financial income was $600,000 and the tax rate was 35%. Pretax income included: Interest income from municipal bonds $25,000 Accrued warranty costs, estimated to be used in 2013 $74,000 Prepaid rent expense, will be used in 2013 $16,000 Installment sales revenue, to be collected in 2013 $45,000 Operating loss carryforward $36,000 What is the adjustment needed to correct the balance of deferred tax asset for 2012? 3. (TCO C) Presented below is pension information related to
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fundamental qualities GAAP has four basic assumptions, four basic principles, and four basic constraints. Assumptions * Accounting Entity: assumes that the business is separate from its owners or other businesses. Revenue and expense should be kept separate from personal expenses. * Going Concern: assumes that the business will be in operation indefinitely. This validates the methods of asset capitalization, depreciation, and amortization. Only when liquidation is certain this assumption is
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flyer points. In the past, the cost/provision approach accounting practices were used. Under this method, the upfront sale of points to bank, credit card companies, mortgage brokers, and general retailers was recorded as revenue in the income statement at the time of sale. The expense related to the sale, that is the cost of travel, was recorded at a later period, when the airline provided the travel service, or gave up the ‘free’ seat. The Australian Financial Review (AFR) reported in December 2004
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CONCEPTUAL FRAMEWORK * The overall objectives of financial statements of The Framework Provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. Financial statements prepared for this purpose meet the common needs of most users. The economic decisions that are taken by users of financial statements require an evaluation of the ability of an enterprise to generate cash
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into time periods for reporting purposes. 5. Historical-cost principle (47) - (b) Indicates that market value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.) 6. Matching principle (49) - (a) Recognizes expenses based on contribution to revenues in the proper period. 7. Full disclosure principle (51) - (c) Ensures that all relevant financial information is reported. 8. Cost-benefit relationship (53) - not defined in any assumptions
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Explaining Basic Accounting Concepts and Business Structures Matthew Philip Moshi ACC/537 September 17, 2012 Joseph P McDonald Basic Accounting Concepts and Business Structures The catastrophic collapse of the stock market in 1929, subsequently resulting in the great depression will forever coincide with the private sector’s formulation and subsequent issue of formal accounting standards (Keiso, Warfield, & Weygandt, p. 6, 2007). Appeals for heightened governmental regulation over financial
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