Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

The last step in the process for revenue recognition is to:

Identify the contract with the customer

Determine the transaction price

Allocate the transaction price to the performance obligations

Recognize revenue when the performance obligation is satisfied

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Verified step by step guidance

Understand the concept of revenue recognition: Revenue is recognized when a company satisfies its performance obligations as outlined in the contract with the customer.

Review the five-step model for revenue recognition under ASC 606: (1) Identify the contract with the customer, (2) Identify the performance obligations in the contract, (3) Determine the transaction price, (4) Allocate the transaction price to the performance obligations, and (5) Recognize revenue when the performance obligation is satisfied.

Focus on the fifth step: Revenue is recognized only when the company has fulfilled its performance obligation, meaning the promised goods or services have been delivered to the customer.

Understand the criteria for satisfying a performance obligation: This can occur over time (e.g., services provided) or at a point in time (e.g., delivery of goods). The company must evaluate whether control of the goods or services has been transferred to the customer.

Ensure proper documentation and compliance: The company must document the satisfaction of the performance obligation and ensure compliance with accounting standards to accurately recognize revenue.