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

How is revenue from ticket sales typically calculated under the revenue recognition principle?

By adding the number of tickets sold to the number of tickets remaining

By recording the total cash received from ticket sales at the time tickets are offered for sale

By multiplying the number of tickets sold by the ticket price when the event occurs

By estimating future ticket sales and recognizing revenue immediately

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Verified step by step guidance

Understand the revenue recognition principle: This principle states that revenue should be recognized when it is earned and realizable, not necessarily when cash is received. For ticket sales, revenue is typically recognized when the event occurs, as that is when the service is provided.

Identify the key components for calculating revenue from ticket sales: These include the number of tickets sold and the price per ticket. Revenue is earned when the event takes place, as the service (event attendance) is delivered at that time.

Set up the formula for revenue calculation: Revenue = Number of tickets sold × Ticket price. This formula ensures that revenue is recognized based on the actual sales and the price of the tickets, aligning with the revenue recognition principle.

Determine the timing of revenue recognition: Revenue from ticket sales should not be recognized at the time tickets are offered for sale or based on future estimates. It is recognized when the event occurs, as that is when the obligation to provide the service is fulfilled.

Apply the formula when the event occurs: Once the event takes place, multiply the number of tickets sold by the ticket price to calculate the revenue. This ensures compliance with the revenue recognition principle and accurate financial reporting.