Ch. 5 Flashcards
What revenue recognition method is used at delivery?
Point of delivery & completed contract method - at delivery
What revenue recognition method is used prior to delivery?
Percentage of Completion - during production
What revenue recognition method is used after delivery?
Installment & cost recovery methods - at cash collection
Gross profit percentage
Gross profit divided by sales
What is the contra account to installment receivable?
Deferred gross profit
How do you figure out CIP and what does it stand for?
CIP: Construction In Progress
CIP = costs incurred + Profit recognized
What amounts are included in Billings?
Billings = Cash Collections + Accounts Receivable
What is Asset turnover ratio? ratio & definition
Net sales/average total asset
Measures a company’s efficiency In using assets to generate revenue
Receivables turnover ratio - ratio & definition
Net sales / average accounts receivable (net)
Indication of how quickly a company is able to collect its accounts receivable.
Inventory turnover ratio - ratio & definition
COGS / average inventory
Measures a company’s efficiency in managing its investment in inventory.
Number of times the average inventory balance is sold during a reporting period.
Indicates how quickly inventory is sold
What is average collection period ratio and definition?
365/receivables turnover ratio
Indicates the average age of accounts receivable
How do you figure out dividends paid?
Beginning RE
+ Net Income
- Ending RE
= dividends paid during the period.
