会计英语unit 10 Revenue, Expense Profit.ppt

Unit 10 Revenue, Expense Profit ⅠRevenue Revenues are cash inflows or other enhancements of assets of an entity or settlement of its liabilities or a combination of both in the normal operation of business activities. Those inflows result in increases in equity, other than increases relating to contributions from equity participants. Revenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. They are excluded from revenue. Recognition of revenue Revenue Recognition Principle: Revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received Sale of goods Revenue from the sale of goods shall be recognized when all the following conditions have been satisfied: (a) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods; (b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the entity; and (e) the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from sale of goods (1)Cash sale Dr. Accounts Receivable Cr. Sales revenue Rendering of services Revenue from services may be recognized when the service is actually completed. When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction shall be recognized by reference to the stage of completion of the transaction at the end of the re