Revenue Recognition Standards

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intervene and override controls [Ball (2009), Crumbley et al. (2013)], while political and influential connections and practices influenced the achievement of fraud [Giroux (2008)].
Will the revenue recognition standard changes increase financial fraud? The research results revealed that the revenue recognition standard is the most challenging issues within the accounting profession, has gained priority treatment and focused from standard setters and regulators, has raised concern to all types of companies, management, auditors, financial statement users and preparers [Sridharan, Summers and Mcalum (2003), Marshall (2004), Srivastava (2014), Fazio and Johnson (2013), Weirich and Rouse (2000), Goel and Gangolly (2012), Sherman, Loseman and …show more content…
However, as changes transpired impacting accounting standards, it opens the river of opportunities of revenue standard inconsistencies or complexities and regulatory weaknesses, later the accounting industry was flooded by motivated greedy and dishonest executives for their own personal benefits, props by personal rationalism of strong belief of oneself and the belief that aggressive earning management is ethical, until the landslide of fraud detection swift away companies and the accounting …show more content…
Eventually perpetrators end up hanging themselves as they become less careful and gaining the “gambler’s mentality”. Revenue recognition is obviously vulnerable and the easiest way to misstate or manipulate financial fraud among other item in the financial statements, the target and battle grounds of accounting problems due to its significance and as a core component of the financial statement. Evidently, the revenue recognition standards have gone through a boat load of different changes over time in response to past accounting

Revenue SAB 104

For most companies, revenue “is among the largest and most value-relevant item in a firms’ financial statements” (Zhang, 2005). It can be argued that profit is most important, however, revenue must be recognized before profit can be calculated and communicated within the company’s financial statements. Revenue within the financial statements provides an understanding of the profitability of the company and the ability to value the company within a specific period. Revenue is budgeted and compared…

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Essay about International Financial Reporting Standards and Accounting Standards Board

The basic idea is to come up with a global standard of accounting to make sure that businesses across the globe can communicate, on a financial level, much easier. Imagine the IASB, international accounting standards board, setting a universal standard used throughout the world instead of having a separate standard like the U.S. GAAP, generally accepted accounting practices, used here in the United States. The merging of these two accounting standards, and many others from nations around the world…

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Essay on Boston Automation Systems, Inc.

current revenue recognition policy (ies)? As of 1999 annual report, the company recognizes the revenue upon shipment. But this will change with SAB 101. The company will wait until the delivery and customer acceptance to recognize the revenue In addition to that they also calculate the estimated warranty costs. The company recognizes the service revenues as the services are provided (not before the services are provided) The Company does not count in service revenue with other revenues (revenues…

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Essay about Generally Accepted Accounting Principles and Revenue Recognition

Revenue Recognition: Case Study on Caltron Computers, Inc. Julie Mong April 17 , 2010 1. In general, evaluate Caltron's revenue recognition policy and the quality of Caltron's earnings. Caltron Computers, Inc., a computer hardware company, is publicly held with market capitalization amounting to over $450 million. Carlton’s system designs enable their mini-computer systems to measure up to the power of mainframes with small cost outlays. The accounting practices…

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Econ Notes Essay

ECON NOTES The primary authority for software revenue recognition is AICPA Statement of Position (SOP) No. 97-2, Software Revenue Recognition, which is the result of about 12 years of development work from 1985 through 1997. It applies to both public companies (according to SAB 104) and private enterprises. Under SOP 97-2, recognition of revenue generally occurs at delivery if a four-part conjunctive test is met. Software delivery should be straightforward and require no special production, modification…

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Essay Accounting 354

International Accounting Standards Board (IASB) •IASB issues International Financial Reporting Standards –All new standards are named IFRS–IASC (prior Board) issued International Accounting Standards (IAS); many are still effective–IAS and IFRS are now collectively referred to as IFRS IASB •Currently15 board members; independent •One additional member will be added by 2012 IFRS Currently there are:•41 IASs 9 IFRSs Nearly 120 nations currently permit or require the use of IASB standards for financial reporting…

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Business: Generally Accepted Accounting Principles Essay

Chapter One Homework Bus 01 Discussion Questions 15. Why is revenue recognition principle needed? What does it demand? It provides guidance on when a company must recognize (record) revenue. It is needed to show how the business is profiting in a certain amount of time. It demands each and every transaction that is made to determine profit. 17. Define a.) assets: Resources that a company owns or controls. b.) liabilities: Creditors’ claims on assets. c.) equity: Owner’s claim on assets…

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Going Global Essay

………………………………………………………..Page 5 Squaring Off Revenue Recognition…………….…………………………….…….Page 6 Recommendations……………………………………………………………………....Page 7 Conclusion……………………………………………………………………………...Page 7 References………………………………………………………………………….Page 9 Executive Summary Publicly traded corporations entering the global market are gearing toward the convergence of financial reporting methods. The anticipated shift toward international accounting standards is targeted to assimilate all financial…

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Questions On Accounting

Revenues ($340,000 + 60,000) $400,000 Expenses: Rent ($40,000  2) (20,000) Salaries (120,000) Utilities ($50,000 + 2,000) (52,000) Net income $208,000 (1) Liabilities (2) Assets (3) Revenues (4) Losses 1. The periodicity assumption 2. The economic entity assumption 3. The realization (revenue recognition) principle 4. The matching principle 1. The matching principle 2. The historical cost (original transaction value) principle 3. The economic entity assumption 1. Disagree — The…

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Essay on Revenue Recognition

REVENUE RECOGNITION IAS 11 – Construction Contracts ISSUE: The primary issue in accounting for construction contracts is the allocation of contract revenue and contract costs to the accounting periods in which construction work is performed. CAUSE: Because of the nature of the activity undertaken in construction contracts, the date at which the contract activity is entered into and the date when the activity is completed usually fall into different accounting periods. SOLUTION: Standard helps…

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