1. If the firm has received a promise of payment but cannot measure this promise with reasonable reliability, and U.S. GAAP would permit revenue to be recognized, but IFRS would
not
permit revenue to be recognized.
2. Realization is the presumption that a firm will remain in operation long enough to carry out its current plans, and in the normal course of its operations, realize changes in the fair values of its assets either by using those assets or selling them.
3. Under the accrual method, the timing of revenue recognition is influenced by when the services or product are provided.
4. The method of revenue recognition where the seller collects part of the selling price in cash and at the same time recognizes as expenses each period the same portion of the cost of goods or services sold as the portion of total revenues recognized is called the direct payment method.
5. If an event or transaction leads to the recognition of revenue, firms match the consumption of any assets (the expense), in time, with the revenue recognized.
6. Notes receivable is the amount owed to a seller by customers who have purchased goods and services on credit.
7. The financial statements contain information for analyzing the collectibility of accounts receivable and the adequacy of the expense for uncollectible accounts. Typical ratios used for this analysis include the accounts receivable turnover ratio, days receivables outstanding, and write-off percentage.
8. Bad Debt Expense is also called the Provision for Bad Debts and the Provision for Uncollectible Accounts.
9. The Accounts Receivable, Gross amount less the Allowance for Uncollectibles yields Accounts Receivable, Net, which reflects the amount of cash the firm expects to collect.
10. When a firm decides that a particular customer account is uncollectible, it removes that account by debiting the Allowance for Uncollectibles and crediting Accounts Receivable, Gross. This process is called writing off the account.