ACC 290 Week 2 DQ2
ACC 290 Week 2 DQ2
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This 0 page Study Guide was uploaded by kimwood Notetaker on Friday November 13, 2015. The Study Guide belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 16 views.
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Date Created: 11/13/15
Week 2 DQZ What is the revenue recognition principle What is the expense recognition principle Why are they important to nancial reporting In order for organizations to provide reliable relevant and transparent financial information to owners managers investors lenders and the IRS they must use accrual based financial accounting systems The revenue recognition principle necessitate that organizations recognize their revenue during the accounting time period that it is earned not necessarily received The time period that the income is earned is considered the time period in which the service was performed or the credit was extended The expense recognition principle is used to match expenses with revenues during the period of time when the service is extended to generate the revenue These two principles are important to accrual based financial reporting and are part of the generally accepted accounting principles GAAP It is also important because accrual based accounting is more accurate for lenders investors managers and employees to know exactly where the organization stands financially at a specific point in time References Kimmel P D Weygandt J J amp Kieso D E 2011 Financial accounting Tools for business decision making 6th ed Hoboken NJ John Wiley amp Sons
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