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Accounting Question...

A photo of History History
Howdy, I got a question for ya'll.


In its accrual basis income statement for the year ended December 31, 2009, Bob's Company reported revenue of $1,550,000. Additional information was as follows:

Accounts receivable – December 31, 2008 $350,000
Accounts receivable – December 31, 2009 550,000

Under the cash basis, how much would Bob's Company report as revenue for 2009?

a. $1,000,000
b. $1,200,000
c. $1,350,000
d. $1,750,000

Please highlight the answer. Need I remind you, I don't know the answer.
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8 replies
 
A photo of universityapplier universityapplier
1,350,000

because as you can see, they earned 200K more A/R, which hasnt been collected
the rest of the revenue, the 1,350,000 has

The revenue recognition principle states you can only state revenue that has been earned. The A/R is not guranteed to be collected. It can be written off. So you get the revenue you had for the yera and subtract it from the increase in A/R

AND VOILAAAAAAAAAAA THERES YOUR ANSWER
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A photo of Chara Chara
^^^

Although this isnt a hmk help forum....

Try yahoo answers next time
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A photo of whatchusaying whatchusaying

@universityapplier wrote
1,350,000

because as you can see, they earned 200K more A/R, which hasnt been collected
the rest of the revenue, the 1,350,000 has

The revenue recognition principle states you can only state revenue that has been earned. The A/R is not guranteed to be collected. It can be written off. So you get the revenue you had for the yera and subtract it from the increase in A/R

AND VOILAAAAAAAAAAA THERES YOUR ANSWER



Wrong, zzz.
Answer is right, but the explanation is incorrect. It has nothing to do with RRP, it's asking what your income is on a cash basis, so revenue is whatever you collect. Write-offs and "A/R not being guaranteed" have nothing to do with the question.
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A photo of universityapplier universityapplier

@History wrote


Under the cash basis, how much would Bob's Company report as [size=6]revenue[/size] for 2009?






@whatchusaying wrote
It has nothing to do with RRP



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A photo of whatchusaying whatchusaying

@universityapplier wrote

@History wrote


Under the cash basis, how much would Bob's Company report as [size=6]revenue[/size] for 2009?






@whatchusaying wrote
It has nothing to do with RRP







So you see the word revenue and that automatically means OMG REVENUE RECOGNITION PRINCIPLE? First of all RRP is only based on accrual accounting, we're translating the accrual basis income statement to CASH BASED revenue. RRP does not apply to CASH BASED revenue, but because it has the word revenue in it the RRP must apply, right? right? /sarcasm. The question has absolutely nothing to do with recognizing what qualifies as revenue, when you're doing any type of cash based question the only thing you're concerned with is how much cash did I collect.

Hey my socks are matching today.

@universityapplier wrote
Matching Principle.


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A photo of universityapplier universityapplier

@whatchusaying wrote

@universityapplier wrote

@History wrote


Under the cash basis, how much would Bob's Company report as [size=6]revenue[/size] for 2009?






@whatchusaying wrote
It has nothing to do with RRP







So you see the word revenue and that automatically means OMG REVENUE RECOGNITION PRINCIPLE? First of all RRP is only based on accrual accounting, we're translating the accrual basis income statement to CASH BASED revenue. RRP does not apply to CASH BASED revenue, but because it has the word revenue in it the RRP must apply, right? right? /sarcasm. The question has absolutely nothing to do with recognizing what qualifies as revenue, when you're doing any type of cash based question the only thing you're concerned with is how much cash did I collect.

Hey my socks are matching today.

@universityapplier wrote
Matching Principle.







you f*cking moron, they are asking you how much [size=9]REVENUE[/size] can they record?

Total revenue - revenue that cannot be recorded = recordable revenue

i made that simple for you since you seem to be a [size=8]late bloomer[/size].


i used RRP because you CANT record your A/R as revenue, correct? so you subtract the total revenue by the A/R (cannot be recorded), and VOILA you get the answer because that has been collected through CASH and short term investments

If you didnt use RRP, and violated it you would have 1,500,000 as your revenue.

clearly you were dropped when you were a kid

and correct me if im wrong, but doesnt A/R make it accrual since you have performed the service and havent been paid yet?
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A photo of g93 g93
^You do realize that watchusaying is in Waterloo AFM (1st or 2nd year, can't quite recall). A f*cking moron that was able to get into the program and has taken at the very least financial accounting and managerial accounting in university.

Under the cash basis, the revenue is recorded when cash is received no matter when goods or services are sold.

Under the accrual basis, the revenue is recognized when both of the following conditions are met:
- Revenue is earned.
- Revenue is realized or realizable.
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A photo of kiddinaround kiddinaround

@universityapplier wrote


you f*cking moron, they are asking you how much [size=9]REVENUE[/size] can they record?

Total revenue - revenue that cannot be recorded = recordable revenue

i made that simple for you since you seem to be a [size=8]late bloomer[/size].


i used RRP because you CANT record your A/R as revenue, correct? so you subtract the total revenue by the A/R (cannot be recorded), and VOILA you get the answer because that has been collected through CASH and short term investments

If you didnt use RRP, and violated it you would have 1,500,000 as your revenue.

clearly you were dropped when you were a kid

and correct me if im wrong, but doesnt A/R make it accrual since you have performed the service and havent been paid yet?



anytime something is entered into A/R, it is revenue of some kind, because you have either performed a service or sold a good.

RRP does not apply with Cash Basis accounting. This is why large businesses and corporations are not allowed to use cash based accounting. It can only be used for small companies where, most of the time, they never accumulate a lot of A/R, and their exchanges of goods and services do not involve credit.

You clearly have very little knowledge of Accounting. Stop calling people morons. Just some advice.
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