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    Revenue Recognition

    Effects of Sales Volume Increase

    If sales volume increases and all other factors remain constant, then the: a. contribution margin ratio will increase b. break-even point will decrease c. margin of safety will increase d. net operating income will decrease

    An example of Revenue Recognition

    Company X sells its products to dealers who sell it to customers .Dealers allow up to 90 days to pay. These terms allow dealers to hold large inventory. By the end of the year, Company X needs to increase its current ratio and decrease its debt-to-equity ratio . If Company x ship extra inventory to dealers, it will increase sale

    Gym membership revenue recognition

    If health club sells lifetime memberships for 5000 each that is not refundable, the owners would want the revenue to be recognized immediately. Is there an economic incentive to defer the membership revenue in accordance with SAB 101?