Los 28.a

Question 1

What is accounts recievable

Answer 1

It is the period when the revenue is recognised, but is not necessarily when cash is deposited.

Question 2

What happens if there is payments for good recieved before the transfer of a good/service

Answer 2

Unearned revenue - a liability of the balance sheet.

Question 3

What is the five step process for recognising revenue

Answer 3

1. Identify the contract
2. Identify the separate or distinct performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue as the entity satisfies an obligation

Question 4

What is a contract?

Answer 4

Agreement between two or more parties that specifies their oblifations and rights, collectability must be probably for a contact to exist.

Question 5

What is a performance obligation?

Answer 5

A promise to deliver a distinct good or service
- A distinct good/service = Customer can benefit from the good or service with other resources, and the promise to transfer the good/service can be identified from other promises

Question 6

What is a transaction price

Answer 6

The amount a firm expects to recieve from a customer in exchange for transferring a good/service to the customer.