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

Which of the following is an example of revenue?

Repayment of a bank loan

Payment of employee salaries

Sales of goods to customers

Purchase of office equipment

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Verified step by step guidance

Step 1: Understand the concept of revenue. Revenue refers to the income generated from the core business activities of a company, such as selling goods or providing services. It is distinct from other financial transactions like loans or asset purchases.

Step 2: Analyze each option provided in the problem. For example, repayment of a bank loan is a financing activity, not revenue. Payment of employee salaries is an expense, not revenue. Purchase of office equipment is an investing activity, not revenue.

Step 3: Identify the option that aligns with the definition of revenue. Sales of goods to customers represent income earned from the primary business operations, which qualifies as revenue.

Step 4: Confirm your understanding by considering the accounting equation: Revenue contributes to increasing the company's assets (e.g., cash or accounts receivable) and is recorded in the income statement.

Step 5: Conclude that the correct example of revenue is 'Sales of goods to customers,' as it directly reflects the company's earnings from its main business activities.