Income reported for a business entity depends on the proper recognition of revenues and expenses. In certain cases, costs are recognised as expenses at the time of product sale and in other situations costs are capitalised if they bring future benefits. In around 250 words, comment on the above statement. Your comments should include valid examples and illustrations.

Q: Accountants try to prepare income statements that are as accurate as possible. A basic requirement…

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: What  are business transactions called that increase owner’s equity as a result of providing a…

A: A liability is amount payable or obligation which results from past event, whose payment needs…

Q: What are some of the accounting information costs? What are some advantages of accounting data?…

A: The answer:

Q: Which statement is incorrect? *

A: Financial statement: Financial information is a written record of an organization and individual…

Q: If revenue exceeds expenses for the accounting period being measured, then we say the company…

A: net assets: Total assets - Total liabilities net loss: Expenses > Revenues net increase: Increase…

Q: Do you agree or disagree? Why?

A: This question could generate some debate as in human resource (HR), employees of the entity can be…

Q: The revenue recognition model is to provide a clear and uniform structure for all businesses to…

A: The answer :

Q: Which statement is incorrect? * The FUNCTIONAL Income Statement classifies expenses into cost of…

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: Revenue is recognized based on a five-step process that is applied to a company's revenue…

A: Definition:   Revenue recognition: GAAP (generally accepted accounting principle) states that under…

Q: Give an example of situation to show how a business adheres to each of the following accounting…

A: HISTORICAL COST - as per the historical cost concept, every company must record its assets and…

Q: Which one of the following accounting concepts/conventions enables the business to make comparative…

A: Accounting is process of recording the monetary transactions occur during the financial year. It…

Q: Which statements are correct? Statement 1: Financial statements must be prepared by a…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Revenue from sources other than the primary operating activity of a business like interest expense…

A: The Multistep income statement categories the different revenues and expenses incurred during the…

Q: If Pepper would report according to FIFO method, what would be the reported inventories, net income…

A: Inventories can be defined as the current assets held by the business entity for the purpose of…

Q: Identify the letter for the principle or assumption from A through F in the blank space next to each…

A: Identification of principle or assumptions:

Q: The principle of revenue recognition results in: a. recording revenue in the income statement b.…

A: In Accounting, there are certain principles and conventions which are followed to get fair view of…

Q: If a company capitalizes costs that should be expensed, how is its income statement for the current…

A: Any capitalization cost increases the assets and there will be no impact on the income statement.…

Q: Depreciation is considered as accounting policy and operational expense for the accounting period.…

A:

Q: The following statements relate to analysis of expenses in the income statement based on either the…

A: PAS are Philippine Accounting Standards PAS 1 -  Presentation of Financial Statements.

Q: When choosing between the ‘nature’ and ‘function’ of expenses in the presentation of its statement…

A: For analyzing the expense, two methods are used, namely the nature of expense and function of…

Q: What criteria determine whether a company can recognize revenue over time?

A: Revenue is recognized over time if one of the following conditions is met: The customer…

Q: one - Which of the following is the account group in which the expenses and losses of the business…

A: Extraordinary activities are the income or expense which is derived from a non business activity and…

Q: Explain to Becky what is meant by discontinued operations and describe to her how that item is…

A: Discontinued operations: Discontinued operations refer to a part of a company’s core business or…

Q: Which statement is incorrect? * A.the FUNCTIONAL Income Statement classifies expenses into cost of…

A: Income statements determine the net income of the entity and its included revenue and gains, expense…

Q: If a business earns a Net Income it means: * O Capital > Revenue Revenue Expenses

A: The question is based on the concept of Financial Accounting.

Q: Are the financial reports contained in the annual report considered financial accounting reports or…

A: Financial reports are information regarding the financial performance and financial position of a…

Q: Which one of the following states that the life of a business can be divided into equal time…

A: Business is assumed to be going for an endless period of time. Therefore, the period is divided into…

Q: Revenue is recognized for accounting purposes when a performance obligation is satisfied. In some…

A: Revenues are the amounts received by a seller on selling goods to the buyer or performing the…

Q: Write TRUE if the statement is correct and if false, write the word or phrase that makes the…

A: Preparation of income statement helps the business entity in determining how much amount of gross…

Q: Which is incorrect concerning the presentation of Income Statement? A. When items of income and…

A: Presentation of Income statement :             The income statement is prepared for presenting the…

Q: Under current GAAP, most resources of a business entity are to be valued in its financial statements…

A: Under current GAAP system which are set of accounting principles That guide financial statements…

Q: Revenue is recognized for accounting purposes when a performance obligation is satisfied. In some…

A: The total amount of income generated by the sale of goods or services connected to the company's…

Q: An internal accounting system should: a. provide information to enable costs to be minimized b.…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: How do the Accountants measure the net income of a specified operating period?

A: Net income: The bottom line of the income statement which is the result of excess earnings from…

Q: Which statement is incorrect? A. The FUNCTIONAL Income Statement classifies expenses into cost of…

A: Financial statement: Financial information is a written record of an organization and individual…

Q: When the business collects Revenues, the result is

A: When business collects revenue, the entry is; Cash A/c        Dr   xxxx      To Income A/c      xxxx…

Q: 7. The following statements are correct, except: Other comprehensive income comprises items of…

A: SOLUTION- FINANCIAL STATEMENT  ARE FORMAL RECORDS OF FINANCIAL ACTIVITIES AND POSITION OF A BUSINESS…

Q: When do accountants consider revenue to be realized?What basic question about recording revenue in…

A:

Q: The amount of assets consumed during the performance of business operations in a period while…

A: Assets can be defined as any resource which has its own intrinsic economic value, owned and…

Q: Explain in what situations it would be appropriate to recognize revenue over time

A: Recognition of Revenue over time: In situations where the service or sales of goods is divided over…

Q: The four major financial reports that summarize the effects of economic events (like the results of…

A: Economic events are the financial transactions that are occurring in the regular course of business.…

Q: Which of the following statements is a usefulness of the income statement? OA. Evaluate the past…

A: For the purpose of business analysis, accounting is important for the business. Accounting is the…

Q: If a business earns a Net Income it means: O Capital > Revenue O Revenue > Expenses Drawings >…

A: Net income As per formula Net income = Revenue-Expenses If expenses are less than revenue than net…

Q: When an entity prepares financial statements in a current cost basis, how is the cost of goods sold…

A: Financial statement: It is the representation of financial data of the company. It shows the…

Q: Kathleen Battle says, “Retained earnings should be reported as an asset, since it is earnings which…

A: No, Kathleen Battle is not correct. The source of an asset includes some part of the retained…

Q: What are some of the costs of providing accounting information? What are some of the benefits of…

A: Accounting information: A procedure or system that collects information related to money related…