BUS 251 Chapter Notes - Chapter 4: Revenue Recognition, Net Income, Cash Flow

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Susan Bubra

Document Summary

Revenue: inlows of economic beneits from a company"s ordinary operaing aciviies (transacions a company normally does with its customers). Has the opportunity to grow and sustain itself. Quanity: amount of revenue and whether the trend is increasing or decreasing. Quanity: source of revenue and the ability to sustain that revenue. When comparing revenues, users must understand what revenue recogniion policies each. If cash low from operaing aciviies is higher than net income: high quality earnings company is using. It"s probable that economic beneits will low to the company. The amount of those beneits can be reliably measured. Risks and rewards of ownership have been transferred to the buyer i. e. ime of sale. Seller has no coninuing involvement or control over the goods. Economic beneits from the transacion will low to the seller. Porion of total services completed can be reliably measured (if service is ongoing).