Crash Course in Accounting and Financial Statement Analysis, Second Edition

Revenue Recognition: To Recognize and When?

Recall the Amazon.com exercise: Amazon.com received a $20 book order on 12/29/07, but it could only record it as revenue once it was shipped on 1/4/08. In some instances deciding when to recognize revenues can be less straightforward. For instance, how should companies engaged in long-term projects recognize revenue?

Basic Principles Revisited: Estimates and Judgments Recall the principle of estimates and judgments: Certain measurements cannot be performed completely accurately, and so must utilize conservative estimates and judgments. Bad debt expense is one such account that must be estimated.