Issues in Accounting Analytical Essay by Calwriter

Issues in Accounting
This paper discusses revenue and expense recognition methods, both standard and percentage of completion criteria, and the pros and cons of expensing stock options.
# 59237 | 930 words | 4 sources | APA | 2005 | US
Published on Jun 09, 2005 in Accounting (Financial) , Business (Accounting)

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This paper explains that expenses are recognized in the same period in which the benefits derived from those costs are recognized (the matching principle) and, thus, recognition of expenses is dictated by revenue recognition; therefore, associations between revenues and costs must be established. The author points out the pros of expensing options include providing a level playing field so that companies, which use cash bonuses, and companies, which use stock options, each have an expense on the income statement; however, there are many significant challenges for a company that expenses options. The paper recommends that manufacturing companies use accrual basis accounting and follow GAAP guidelines for revenue and expense recognition and, with regards to expensing stock options, the company might explore the use of stock awards instead of stock options.

Table of Contents
Revenue and Expense Recognition Methods
Expensing of Stock Options

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