Revenue Recognition Case

427 Words2 Pages
Issue. Revenue recognition, Accrual vs Cash Accounting, Allowance for Bad Debts The accounting department of CAM is instructed by the CFO to recognize the revenue only after the collection of cash, due to uncertainty of collection, which is reasonable and does not show any management intention to deliberately choose the method that results lower net income. Although this method complies with revenue recognition criteria under IFRS, it substantially postpones the revenue recognition process, as well as understates the net income as it only accounts for cash received. Under this approach, the occurrence of expense does not match with the related revenue, thus misrepresents the company’s profitability and income statement. An alternative method
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