chapter 6

Question 1

when is sales revenue recognised?

Answer 1

sales revenue is recognised when goods are sold and delivered.

Question 2

what is revenue recognition theory?

Answer 2

revenue is earned when goods have been delivered or services have been provided

Question 3

what is income received in advanced?

Answer 3

income that has not been earned but has been received.

Question 4

what is income receivable?

Answer 4

income that has been earned but has not yet been received.

Question 5

what is service fee revenue received in advance and should it be recorded?

Answer 5

service fee revenue received before services are provided should NOT be recognised until services are provided to the customer regardless whether payment has been received or not.

Question 6

what is accrual basis of accounting?

Answer 6

business activities that have occured, regardless whether cash is paid or received, should be recorded in the relevant accounting period.