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Accounting and Auditing – April

Depending on the complexity of an entity’s revenue transactions, revenue may be more difficult to audit after implementation of FASB ASC 606, Revenue from Contracts with Customers. Recognition of revenue may be simple (e.g., in a point-of-sale retail environment) or may be more complex. Revenue recognition becomes more complex when the terms aren’t standard (e.g., when rights of return, customer acceptance clauses, or extended payment
terms exist), when sales involve multiple elements, when the amount of consideration is variable (e.g., it is dependent on certain events occurring or it fluctuates based on inputs and outputs), or when the earnings process occurs over time rather than at a point in time.

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