5.2 Revenue Transaction

Question 1

Revenue Recognition Principle (IFRS)

Answer 1

The revenue recognition principle requires revenue to be recorded in the accounts at the time the transaction is completed

Question 2

The Fiscal Period

Answer 2

-Called the accounting period
-period of time over which earnings are measured
- today, fiscal periods are usually one year but do not have to correspond to a calendar year

Question 3

Time period concept (IFRS)

Answer 3

-An accounting standard that provides that accounting will take place over specific time periods known as fiscal periods
-fiscal periods are of equal length and used when measuring the financial progress of a business

Question 4

The Matching Principle

Answer 4

-States that you record expenses to the revenue that’s earned
1. They must be careful to record the proper amount of revenue in the proper period
2. They must subtract only those expenses that helped earn the revenue they recorded in step one

Question 5

Drawings Transactions

Answer 5

Owner withdraws $200 cash for personal use
DEBIT - M. Murrell, Drawings
CREDIT - Bank

The owner takes assets other than cash from the business for personal use
DEBIT - M.Murrell, Drawings
CREDIT - Supplies

The owner collects a debt from a customer and keeps the money for personal use
DEBIT - M. Murrell, Drawing
CREDIT - A/R - J. Brown