What would be the reason a compony would overstate income

Q: Why Sales revenue does not include the residual value?

A: The residual value, also known as salvage value, is the estimated value of a fixed asset at the end…

Q: How must one discount a series of uneven receipts to find present value (PV)?

A: The cash payment or cash receipt of each period should be discounted individually and then add all…

Q: Why is the Modified Accelerated Cost Recovery System not generally accepted for financial accounting…

A:

Q: Please explain the meaning of differential income.

A: Concept of differential is generally used when there are two or more alternatives to choose upon.…

Q: What is the two criteria be satisfied before revenue can be recognized?

A: Revenue recognition principle:    Under the revenue recognition principle, revenue and incurrence of…

Q: The expense recognition principle relates

A: Expense recognition is based on accrual and matching concept where accrual concept states that…

Q: what is the difference betwwen classifying an expense by nature or function?

A: The costs that are incurred to earn revenues in the process of operating activities of the business…

Q: Explain why proponents of LIFO argue that it provides a better match of revenue and expenses. In…

A: "LIFO" stands for last-in, first-out, meaning that the recently purchased inventory items are…

Q: Understand the concept of relevant revenues and costs. What makes a revenue or cost relevant?…

A: solution concept relevant revenue                 relevant revenue means the revenue which has the…

Q: Which of the following conditions would violate the revenue recognition principle? Revenue is…

A: Revenue: This is the income of a firm during an accounting period. The income is recognized as and…

Q: What is a deferred revenue? Provide an example.

A: Deferred revenue: Deferred revenues are revenues related to more than one period.  A deferred…

Q: What is lessor?

A: A lease is the agreement between two individuals. Under the lease agreement one individual provide…

Q: Explain the revenue recognition principle.

A: Accounting principle:

Q: what are the concepts of revenue recognition?

A: Definition:   Revenue recognition principle: Revenue recognition principle states that every…

Q: How is a revenue-recognition abuse related to the percentage of completion method?

A: Accounting is primarily concerned with identifying, recording, measuring, summarizing transactions…

Q: What is the criteria to recognize revenue?

A: Introduction: Taxes, customs charges, earnings from state-owned firms, capital revenues, and foreign…

Q: Why proponents of LIFO argue that it provides a better match of revenue and e expenses? In what…

A: Introduction:- FIFO and LIFO accounting are inventory management and financial accounting procedures…

Q: How cost accounting is useful where financial accounting could not be answered. Give any exampleto…

A: Accounting is primarily concerned with identifying, recording, measuring, summarizing transactions…

Q: Discuss, using practical example how revenue expenditure should not be capitalized?

A: SOLUTION- Thus, a revenue expenditure which increases the utility or productive capacity of an…

Q: What is the revenue recognition principle?

A:

Q: Which type of revenue activity is correctly matched with the revenue recognition method?

A: The question is related with the revenue activity is correctly matched with the revenue recognition…

Q: Why is the revenue recognition principle needed? What does it demand?

A: Revenue recognition forms a part of generally accepted accounting principles (GAAP) that determines…

Q: Define expense recognition principle

A: Expense recognition principle says that all expenses for the particular period must be recognized in…

Q: Of what merit is the contention that the allowance methodlacks the objectivity of the direct…

A: Direct write-off method: This method does not make allowance or estimation for uncollectible…

Q: What is function of expense method?

A: Organisations can opt for either of the options to prepare and report the income statement. They are…

Q: When should DJD recognize revenue

A: The revenues in these type of contracts are based on two types of contracts. 1. Revenues under…

Q: Why does Recognizee revenue when (or as) each performance obligation is satisfied,” is important?

A: Performance obligations are promises to transfer goods or services to a customer. In a transaction…

Q: Explain Deferred Revenue? How it is different from Deferred Expenditures? Give an example?

A: Explain the meaning of deferred revenue and provide example:Deferred revenues:Collection of cash in…

Q: Define the term Income Smoothing.

A: Income Smoothing: It is an accounting technique which is used to move revenues and expenses of one…

Q: What is the difference between the APBO and the EPBO? What are the components of postretirement…

A: Difference between the APBO and the EPBO:Expected pension benefit obligation (EPBO): The amount of…

Q: What is the difference between classifying an expense by nature or function?

A: Expenses: Expenses means money spent for getting revenue to the entity. It involves cost of…

Q: What is Physical Systems of Revenue Cycle?

A: Revenue cycle           Revenue cycle are divided into two              a. physical phase…

Q: What is revenue?

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: What is Revenue Recognition?

A: The income statement is the one of the financial statements of the business.

Q: What are the revenue credits? Give an example?

A: Meaning of Revenue Credit:Revenue Credit refers to the payments received in advance for services…

Q: Explain the term Divisible Profit.

A: Common stock: Common stock is the instrument used by the company for raising funds from the general…

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.