Intermediate Accounting I Exam 2 2024 with 100% Correct Answers| Graded A+

What are the two basic principles in recording revenue? - (1) When? - At the time goods and services are provided to customers and (2) How much? - The amount the company is entitled to receive. FASB's five steps for revenue recognition - -Step 1: Identify the contract with a customer -Step 2: Identify the performance obligations in the contract -Step 3: Determine the transaction price -Step 4: Allocate the transaction price to each performance obligation -Step 5: Record revenue when (or as) each performance obligation is satisfied What is the core revenue recognition principle? - Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services. Performance Obligations - promises to transfer goods or services to a customer