Posted: August 1st, 2016
The term “realization,” in reveenue recognition refers to which of the following?
a) the entity has completed, or substantially completed, the activities it must perform to be entitled to the revenue benefits
b) The product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash or claims to cash
c) The entity has received an irrevocable order for goods or services
d) cash has been received with an irrevocable order for goods or services
(a) Calculate the change that occurred in cash during the month. You may assume that the change in each balance sheet amount is due to a single event (for example, the change in the amount of production equipment is not the result of both a purchase and sale of equipment). (Hints: What is the purpose of the statement of cash flows? How is this purpose accomplished?) Because the retained earnings section of the balance sheet is, in and of itself, an analysis of the change in the retained earnings account for the month, the row for net income and dividends should be entered as the February amount and not the change. Use the space to the right of the January 31 data to enter the difference between the February 28 and January 31 amounts of each balance sheet item. (Negative amount should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required.Omit the “$” sign in your response.)
(b) Prepare a statement of cash flows that explains above changes? (Negative amount should be indicated by a minus sign.Omit the “$” sign in your response.)
none of the above
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