Raamatupidamise algkursus Training - Cash Basis Revenue Raamatupidamise algkursus

Being involved in raamatupidamise algkursus training, it is important to learn and practice major topics which will give you basic knowledge and understanding of main raamatupidamise algkursus principles.

One of such topics is cash basis revenue raamatupidamise algkursus covering revenue recognition principles which are closely related to the cash receipt moment rather than to the actual sale of goods or provision of services.

Accrual method requires revenues to be recognized when sale of goods or provision of services occurred, i.e. ownership title to the goods was transferred from seller to the customer or customer accepted services provided.

Such moment means the seller has a right to claim payment from customer for the goods sold, services provided despite the fact whether cash for sale was paid or not. Applying this principle advances received are not recognized as revenues,

if no cash is received at the moment of sale revenue recognition is not postponed. This method will also cause recognition of advances received (if cash is paid up front before the sale) or accounts receivable (if cash is paid after the sale).

Cash basis method requires revenues to be recognized only when cash was received. In case customer makes payment in advance, such advance will be recognized as revenue without taking into account the fact that goods were not yet sold or services were not yet provided. In case customer pays later after the sale occurred revenues will be recognized only when cash is received.

Applying cash basis revenue recognition method financial statements will not present the right of the seller to claim payment from customer which is done in the form of raamatupidamise algkursus for accounts receivable when accrual raamatupidamise algkursus principle is applied. So no there will be no fair presentation of assets.

Assume business sold goods for $5,400 on March 15, cash will be received on April 20. Applying cash basis revenue raamatupidamise algkursus method, revenues will be recognized only on April 20, i.e.

Assume business sold goods on March 15, part of cash was received in advance on February 17, i.e. $1,300. Remaining part of cash will be received on April 20.

Since revenues are recognized when cash is received in February advance received will be recognized as revenue, i.e.:

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