Studying business is a long haul. Still, it is the biggest dream, an obsession…for all those who have a yearning for power and control. During the course of their studies, one of the most difficult topics they are encountered with is ‘revenue recognition.’
Moreover, completing assignments on the topic becomes even more difficult, and the high weight of the topic in exam paper further exacerbates the situation. In such a situation, choosing services such as revenue recognition homework answers can serve as an aid.
Aim of such services is to provide you a long-standing assistance
Although bearing the names as homework help services, such services are set up with an aim to assist students not only with their home assignments but also in their overall academics. By ensuring the availability of subject experts to students 24/7, such homework help services make sure that students score good in academics by availing them to place their orders whenever they encounter problems with understanding any concept.
Why is understanding revenue recognition important?
The most simple answer to this question is the significance of revenue recognition in business. As revenue is, in a way, source of income for any company, apprehending the conditions under which it can be recognized is mandatory for the members of the company. Also, it is obligatory for a business student to comprehend revenue recognition if he wishes to achieve success in his future business. For the purpose, help of services such as revenue recognition homework answers can be sought.
Understanding the term
Before knowing revenue recognition, you must be aware that Financial Accounting Standards Board (FASB) and International Financial Reporting Standards (IFRS) are responsible for giving all the guidelines or laws regarding accounting in business. Principles of revenue recognition too, are given by FASB and IFRS. Revenue recognition, as we’ve already stated above, is an accounting principle that depicts the conditions under which revenue can be recognized on certain goods and services.
Recognition of revenue implies that payment for a product is either done or expected to be done in the coming time. On the basis of time of payment of amount, accounts are classified as accrued and deferred ones. Services such as revenue recognition homework answers provide you a more descriptive look into the topic. To deal with the problems related to revenue recognition, here we are with five important tips.
1.) Learn to identify the critical events in which revenue can be recognized
One of the important things one needs to learn in order to tackle revenue recognition problems is to identify the critical events when the revenue can be recognized. IFRS has generated certain criteria for the corresponding identification.
- Passing on of risks and rewards from seller to buyer.
- No control of seller over the goods sold.
- Assurance of payment collection.
- Measurability of amount of revenue.
- Measurability of costs of earning the revenue.
2.) Know the general rule of realization of revenue
To tackle with problems related to any topic, one should know the general rules to deal with such problems. To receive in-depth details of general rules of revenue recognition, one can seek help of services such as revenue recognition homework answers. Here is a short description of realization and earning of revenue.
- Revenue is said to be realized when cash is received for products or services, such as in the form of advance payments or payment at the time of sale.
- However, revenue is earned once the delivery of those products or services has been done
For revenue recognition, both assurances of payment and delivery of goods and services are necessary.
3.) Know the types of transactions from which revenues can be recognized
Following types of transactions account for the recognition of revenue.
- Revenue from selling inventory is recognized at the time product is sold.
- Revenue from provided services is recognized on the completion of delivery and payment for the services.
- That from permission to use a company’s assets is recognized as assets are used with passage of time.
4.) Know and consider the exceptions as well
Be it any subject or any topic; none is completely devoid of exceptions, so is the case with revenue recognition. We’ve listed below some of those exceptions. One can place an order to services such as revenue recognition homework answers to receive a more detailed document concerning the exceptions.
- According to the principle, revenue from selling inventory is recognized at the time of sale, but there are exceptions to this rule as buyback agreements ( sale of a product by the company with a promise to buy it back after a specified time, which plainly means no sale if buyback price covers all costs imposed by inventory along with holding costs).
- Generally, in case of long term contracts such as construction of roads, buildings, etc., contractors charge the buyer on partly basis depending on the part of work completed, for instance, on every inch of flooring done in a house.
5.) Learn about the newly issued recognition standard
Both IFRS and FAAP are organizations that are responsible for generation of accounting standards regarding revenue recognition. Formerly issued guidelines by both the organizations differed from each other, and thus, it was suggested by many to issue new standards. These new standards were thereby issued with an aim to achieve better financial reports and provide more information to investors through financial statements.
Revenue recognition is one of the most important parts of accounting as it is a measure investors use to assess a company’s overall performance. Therefore, it becomes important for business students to study it in proper detail. If there is a difficulty in understanding the same, they can opt for services such as revenue recognition homework answers and receive all the aid they need.