Running a Profitable Business: Revenue Recognition
1h 32mBeginner2015-10-26
Authors
Jim Stice
Professor of Accounting at BYU
Kay Stice
Professor of Accounting at the BYU Marriott School of Management
Course details
Revenue recognition determines when a sale should be recorded: This month or next month? This year or next year? This seems like an easy question until you consider situations in which a company sells a package of goods and services for one joint price, aka multi-element transactions.
But without recognizing revenue, a company can't hope to report any profit. Accordingly, company management is typically under great pressure to recognize revenue as soon as possible. Want to understand these concepts better? Join professors Jim and Kay Stice as they introduce the theory, practice, and implications of revenue recognition. Together they demonstrate how this seemingly innocent accounting topic can turn a reported profit into a reported loss, sometimes with multibillion dollar implications for company values.
Learning objectives
Explain the importance of revenue recognition.
Distinguish between two ratio methods for evaluating a company.
Interpret how to recognize revenue with cash collections.
Describe how to recognize revenue with contracts.
Identify the standards entities driving revenue recognition rules.
Summarize the two factors used with the price-to-sales (P/S) ratio.
But without recognizing revenue, a company can't hope to report any profit. Accordingly, company management is typically under great pressure to recognize revenue as soon as possible. Want to understand these concepts better? Join professors Jim and Kay Stice as they introduce the theory, practice, and implications of revenue recognition. Together they demonstrate how this seemingly innocent accounting topic can turn a reported profit into a reported loss, sometimes with multibillion dollar implications for company values.
Learning objectives
Explain the importance of revenue recognition.
Distinguish between two ratio methods for evaluating a company.
Interpret how to recognize revenue with cash collections.
Describe how to recognize revenue with contracts.
Identify the standards entities driving revenue recognition rules.
Summarize the two factors used with the price-to-sales (P/S) ratio.
Skills covered
Accounting SkillsFinance and AccountingLimited Series
Concepts
0. Introduction
- 01 - Welcome
1. Controversy over Revenue Recognition
- 02 - Groupon story
- 03 - Defining revenue recognition
- 04 - Who cares about revenue recognition
- 05 - Traditional revenue recognition criteria
2. Timing of Revenue Recognition
- 06 - Story of two brothers on a consulting project
- 07 - Before cash collection
- 08 - At the same time as cash collection
- 09 - After cash collection
3. Complication of Multiple Element Transactions
- 10 - Buying an iPhone
- 11 - Satisfying contractual obligations to customers
- 12 - Valuing the components
- 13 - Recognizing revenue
- 14 - The practical impact
4. Controversial History of Revenue Recognition Accounting Standards
- 15 - Story of SAB 101
- 16 - Old accounting standards in a complex business world
5. Revenue Recognition and Valuation of Start-Ups
- 17 - The MicroStrategy story
- 18 - Using price-to-sales ratios
- 19 - Valuing a Chinese state-owned telecom company
6. Famous Frauds and Scandals
- 20 - Story of ZZZZ Best
- 21 - Channel stuffing, brick shipping, and lying
Conclusion
- 22 - Wrap-up