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The revenue recognition principle dictates that companies recognize revenue in the period in which it was received rather than when it was earned- True or False?
false
The flex in the flexible budget relates solely to variable costs?
The flex in the flexible budget relates solely to variable costs such that it uses percentages of revenue for certain expenses. Flex budget is used rather that the usual fixed numbers to allow for an infinite series of changes in budgeted expenses that are directly tied to actual revenue incurred.
Is expenses an asset equity or liability account?
Expenses are not classified as an asset, equity, or liability account; rather, they are part of the income statement. They represent the costs incurred in the process of generating revenue. When expenses are recognized, they reduce net income, which in turn affects equity but do not appear directly on the balance sheet as assets or liabilities.
Is revenue reserves the same as profit?
No, revenue reserves are not the same as profit. Revenue reserves refer to the portion of a company's profits that are retained within the business for future use, rather than distributed as dividends to shareholders. Profit, on the other hand, is the total income generated by a company after all expenses have been deducted. Essentially, profit can contribute to revenue reserves, but they represent different financial concepts.
Should you accrue capital expenses?
Capital expenses should not be accrued in the same way as operating expenses because they represent investments in long-term assets rather than current period costs. Instead, capital expenses are typically capitalized and depreciated over the useful life of the asset. This approach aligns expenses with the revenue generated by the asset, providing a more accurate financial picture. Therefore, while you don't accrue capital expenses, you do need to track and manage them appropriately.
The revenue recognition principle dictates that companies recognize revenue in the period in which it was received rather than when it was earned- True or False?
false
The flex in the flexible budget relates solely to variable costs?
The flex in the flexible budget relates solely to variable costs such that it uses percentages of revenue for certain expenses. Flex budget is used rather that the usual fixed numbers to allow for an infinite series of changes in budgeted expenses that are directly tied to actual revenue incurred.
Is expenses an asset equity or liability account?
Expenses are not classified as an asset, equity, or liability account; rather, they are part of the income statement. They represent the costs incurred in the process of generating revenue. When expenses are recognized, they reduce net income, which in turn affects equity but do not appear directly on the balance sheet as assets or liabilities.
Does billings in excess of cost increase or decrease the bottom line?
Billings in excess of cost typically increase the bottom line, as they represent revenue that has been recognized but not yet matched with the associated expenses. This situation often occurs in long-term contracts or projects, where revenue is recorded based on progress rather than completed costs. Consequently, having billings exceed costs can positively impact profit margins in the short term, though it's important to monitor the situation to ensure it aligns with ongoing project performance.
Is revenue reserves the same as profit?
No, revenue reserves are not the same as profit. Revenue reserves refer to the portion of a company's profits that are retained within the business for future use, rather than distributed as dividends to shareholders. Profit, on the other hand, is the total income generated by a company after all expenses have been deducted. Essentially, profit can contribute to revenue reserves, but they represent different financial concepts.
Should you accrue capital expenses?
Capital expenses should not be accrued in the same way as operating expenses because they represent investments in long-term assets rather than current period costs. Instead, capital expenses are typically capitalized and depreciated over the useful life of the asset. This approach aligns expenses with the revenue generated by the asset, providing a more accurate financial picture. Therefore, while you don't accrue capital expenses, you do need to track and manage them appropriately.
Is it true a withdrawal by the owner is recorded as a deduction from assets and an increase in expenses?
Yes, a withdrawal by the owner is typically recorded as a deduction from the owner's equity rather than directly from assets or as an expense. This transaction decreases the equity section of the balance sheet, reflecting that the owner has taken money out of the business. While it does reduce the overall assets, it does not increase expenses on the income statement, as withdrawals are not considered business expenses.
Is rental revenue a product cost or period cost?
Rental revenue is typically considered a period cost, as it is associated with the cost of occupying a space over a specific time period rather than being directly tied to the production of goods or services. Period costs are expensed in the period they are incurred, unlike product costs, which are capitalized as inventory until sold. Therefore, rental revenue does not fall under product costs but rather aligns with expenses recognized in the income statement for that period.
Is preliminary expenses is a administrative expenses or selling expenses?
Preliminary expenses are neither administrative expenses nor selling expenses rather these are classified as other assets in balance sheet and amortized over period of life of business.
How much does business software usually cost?
Many companies will offer business software these days to help employers keep track of their expenses. Most of these companies will not sell it outright but rather lease it for a monthly price. It is typically about $5 to $12 for each employee.
What is componets of flexiable budget?
A flexible budget, or "flex" budget, incorporates different expense levels into the budget, depending upon changes in the amount of actual revenue generated. This approach varies from the more common static budget, which contains nothing but fixed expense amounts that do not vary with actual revenue levels.In its simplest form, the flex budget uses percentages of revenue for certain expenses, rather than the usual fixed numbers. This allows for an infinite series of changes in budgeted expenses that are directly tied to actual revenue incurred. However, this approach ignores changes to other costs that do not change in accordance with small revenue variations. Consequently, a more sophisticated format will also incorporate changes to many additional expenses when certain larger revenue changes occur, thereby accounting for step costs. By incorporating these changes into the budget, a company will have a tool for comparing actual to budgeted performance at many levels of activity.
Is fee income revenue?
Yes, fee income is considered a form of revenue. It refers to the earnings generated by a business from services provided, rather than from the sale of goods. This type of income is common in industries such as finance, healthcare, and consulting, where companies charge fees for specific services rendered to clients. Overall, fee income contributes to a company's overall revenue stream.
