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 NOT one of the five steps for recognizing revenue under the revenue recognition principle?

Allocate the transaction price to performance obligations

Record cash receipts from customers

Determine the transaction price

Identify the contract with a customer

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Verified step by step guidance

Step 1: Understand the revenue recognition principle, which is a framework for recognizing revenue in financial accounting. It consists of five specific steps to ensure revenue is recognized appropriately.

Step 2: Review the five steps of revenue recognition: (1) Identify the contract with a 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 (or as) the entity satisfies a performance obligation.

Step 3: Compare the options provided in the problem to the five steps of revenue recognition. The options are: 'Allocate the transaction price to performance obligations,' 'Record cash receipts from customers,' 'Determine the transaction price,' and 'Identify the contract with a customer.'

Step 4: Identify which option does not align with the five steps of revenue recognition. Specifically, 'Record cash receipts from customers' is not part of the revenue recognition process, as it pertains to cash flow management rather than revenue recognition.

Step 5: Conclude that the correct answer is 'Record cash receipts from customers,' as it is not one of the five steps for recognizing revenue under the revenue recognition principle.