What do accountants mean when they say revenue can be recognized under the accrual basis of accounting?
Under U.S. GAAP, which requires the use of accrual basis accounting, a company cannot recognize revenue until their performance obligation is satisfied. The visual below illustrates that key steps to revenue recognition:
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What are the five steps for revenue recognition under U.S. GAAP (ASC 606)?
There are 5 key steps or principles that are required for revenue to be recognized: Step 1: Identify the Contract with a Customer: A contract is a written or spoken agreement, generally concerning the sale of goods, employment terms, tenancy of property, and will be enforceable by law. Step 2: Identify the Performance Obligations in […]
What does the cash flow statement for a not-for-profit (NFP) include?
Like reporting for private organizations, the statement of cash flows will report the statements as operating activities, investing activities, and financing activities. FASB ASC 230 provides guidance on the presentation of the statement of cash flows for nongovernmental not-for-profit organizations:
What are some signs that control has been transferred from the seller to the buyer in a transaction under U.S. GAAP?
Under ASC 606, in order for a transaction to be complete, control of the goods has to pass from the seller to the buyer. The visual below outlines some indications that transfer of the goods is complete: