Revenue and Expenses

Question 1

Revenue

Answer 1

• economic resource earned during a period from sales or products/services
• Recognised when the product or service has been provided

Question 2

challenges

Answer 2

• customers pay in advance
• products or services provided over multiple periods
• Credit worthiness of customers

Question 3

Managers

Answer 3

managers of the selling form have the best information on whether rev has been earned and cash is likely to be received

Question 4

Expenses

Answer 4

• economic resources that have been consumed or declined in value
• incur expenses to acquire or produce products or services

Question 5

Exp Challenges

Answer 5

• when resources provide benefits over multiple periods
• when the timing and amount of payment for resources in uncertain
• difficult to define the value of resources consumed

Question 6

Expense recognition

Answer 6

• matching: resources consumed that have a cuse and effect relation with rev
• Conservatism: resources consumed that have no clear cause and effect relations with rev are expensed in the period incurred