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FAR-01 · The FAR Roadmap
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What you will learn
Trace recognition, measurement, recording, and presentation through a single transaction.
- Substance of the transaction
- Recognition, measurement, and presentation
- Flow to the four statements and notes
Selling goods and receiving payment do not necessarily happen on the same day. First establish what occurred.
| Facts and calculations | Judgment and meaning |
|---|---|
| Goods delivered; payment of 30 will be collected next month | If revenue recognition criteria are met: debit accounts receivable 30 / credit sales revenue 30 |
| Collection of 30 the following month | Debit cash 30 / credit accounts receivable 30. Do not record sales revenue again |
One example, from judgment to recording
- Facts and calculations
- Goods delivered; payment of 30 will be collected next month
- Judgment and meaning
- If revenue recognition criteria are met: debit accounts receivable 30 / credit sales revenue 30
- Facts and calculations
- Collection of 30 the following month
- Judgment and meaning
- Debit cash 30 / credit accounts receivable 30. Do not record sales revenue again