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#EXPENSE RECOGNITION PRINCIPLE HOW TO#

It states that any expenses need to be recognized in the same accounting period as their related revenue. The expense recognition principle is a fundamental principle of accounting. Explaining the Expense Recognition Principle The expense recognition principle is an important part of the matching principle and dictates that expenses need to be recognized in the same period as their corresponding revenue. In fact, it is one of the Generally Accepted Accounting Principles.

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The recognition of income under ASPE differs from IFRS in the following key FA2 -Module 4 of 43 (Level 1) Module summary Print this module CICA Handbook – Accounting, Part II - Accounting Standards for Private Enterprise, Section 3400 Revenue governs the recognition of income. (Level 1) 4.7 Ethical considerations Decide whether the choice of a particular accounting policy or procedure is ethical under the circumstances.

(Level 1) 4.6 Predictive ability of the income statement: revenues and expenses Provide examples that illustrate how reported earnings can be impacted by revenue and expense accounting and the impact this has on interpreting the reported earnings information. (Level 1) 4.5 Expense recognition Apply the definitional approach to expense recognition to determine when costs should be capitalized and apply the expense recognition principle to determine when costs should be expensed. (Level 2) 4.4 Revenue recognition by effort expended Apply the percentage-of-completion method of accounting for revenue from long-term contracts. (Level 1) 4.3 Revenue recognition before and after delivery Describe the criteria for recognizing revenue before and after delivery. (Level 1) 4.2 Revenue recognition at delivery Describe the criteria for recognizing revenue at time of delivery. Topic outline and learning objectives 4.1 Revenue recognition concepts Explain the theory underlying current recognition practices for various sources of revenue. Test your knowledge Begin your work on this module with a set of test-your-knowledge questions designed to help you gauge the depth of study required. Finally, you apply your knowledge of the ethical concerns that affect revenue and expense recognition to a case involving a company reporting on its income results. As you work through each topic, you acquire an understanding of the timing and methods of expense recognition.

#EXPENSE RECOGNITION PRINCIPLE HOW TO#

You also learn how to evaluate the factors that affect the timing and amount of revenue recognized: warranties, returned goods, and the type of sale. Course Schedule Course Modules Review and Practice Exam Preparation Resources Module 4: Revenue and expense recognition Overview In this module, you learn about the concepts and processes of revenue and expense recognition, and become familiar with the three criteria for revenue recognition: performance, measurability, and collectibility.