Join Jim Stice for an in-depth discussion in this video Satisfying contractual obligations to customers, part of Running a Profitable Business: Revenue Recognition.
- Online I found the following definitions…of the word revenue:…Amount of money regularly coming in,…Money that is made or paid to a business or an organization,…Income that a company receives from its normal…business activities, usually from the sale…of goods and services to customers,…Amount of money a company earns through the sale…of goods or services, and rents, and other sources.…Lots of people have their opinion…about what the word revenue means.…But revenue is an accounting word,…so we, the accountants of the world,…get to define what it means.…
Let's consider each one of these…possible definitions of the word revenue.…First, amount of cash collected…by the seller from the buyers.…This is okay, I guess, but if we use…this definition of revenue,…then we are giving up on using the income statement…as a measure of economic performance.…As we have already discussed, in several different contexts,…the flow of cash does not match the pattern…of economic activity, performed by a seller.…We have a statement of cash flows,…
But without recognizing revenue, a company can't hope to report any profit. Accordingly, company management is typically under great pressure to recognize revenue as soon as possible. Want to understand these concepts better? Join professors Jim and Kay Stice as they introduce the theory, practice, and implications of revenue recognition. Together they demonstrate how this seemingly innocent accounting topic can turn a reported profit into a reported loss, sometimes with multibillion dollar implications for company values.
- Defining revenue recognition
- Timing revenue recognition
- Understanding multi-element transactions
- Valuing companies
- Reviewing the great revenue frauds and scandals of history