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Accounting for Revenue: Introduction and Measurement

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Accounting for Revenue: Introduction and Measurement

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Questions and Answers

What is the primary purpose of accounting principles and standards?

To attract investors

To communicate performance periodically

To calculate business cycle duration

To measure and report performance (correct)

When will the one-time landscaping job's revenue reflect for the landscaping company if the customer does not pay for weeks?

When the customer pays (correct)

Immediately after completing the job

At the end of the financial year

After a month

What is the significant reason for the importance of the revenue recognition principle?

To calculate business cycle duration

To measure and report performance

To communicate performance periodically

To attract investors (correct)

Why is 'revenue' considered the most important financial performance indicator for an entity?

It reflects the company's ability to attract potential investors Signup and view all the answers

What are the two related questions that accounting for revenue requires answers to?

How much revenue to be recognized and when should it be recognized Signup and view all the answers

What is the definition of revenue in the context of the given text?

Revenue can be earned by sale of goods or provision of services, as well as by letting others use resources owned by the enterprise. Signup and view all the answers

How are trade discounts recorded in the context of revenue?

Trade discounts are shown separately as a reduction of revenue. Signup and view all the answers

In the context of sales return, how is it treated in accounting?

Sales return is recorded as an increase in expenses. Signup and view all the answers

What does GST (Goods and Services Tax) represent in the given context?

GST is a tax levied on the customer but borne by the manufacturer/seller. Signup and view all the answers

How do cash discounts for prompt payment affect the recording of revenue?

Cash discounts are recorded as a reduction of revenue at the time of sale. Signup and view all the answers