125 S Receipt of cash Devising an Idea 8. 2. Delivery of goods Making purchases (e.g. of inventories) to customers Receipt of orders after completing production 3. Receipt of orders before commencing production 4. Completion of production Commencing production 5. Progressivaly throughout production The operating cycle (Source: AARF, ED 51B) Using the operating cycle provided above, identify in each case at what point in the operating cycle (1-9) the revenue should be recognised. Provide full justification and give basis for your choice. 1. A soft-drink manufacturer 2. A legal firm 3. A theatre that sells season tickets to musical productions 4. A gold-mining company 5. A company which sells houses on an instalment plan: term of payment extending to 20 years: buyers assume all risks of ownership: buyers pay a deposit of 25% pf the sales price 6. A contractor building a bridge for the government

125 S Receipt of cash Devising an Idea 8. 2. Delivery of goods Making purchases (e.g. of inventories) to customers Receipt of orders after completing production 3. Receipt of orders before commencing production 4. Completion of production Commencing production 5. Progressivaly throughout production The operating cycle (Source: AARF, ED 51B) Using the operating cycle provided above, identify in each case at what point in the operating cycle (1-9) the revenue should be recognised. Provide full justification and give basis for your choice. 1. A soft-drink manufacturer 2. A legal firm 3. A theatre that sells season tickets to musical productions 4. A gold-mining company 5. A company which sells houses on an instalment plan: term of payment extending to 20 years: buyers assume all risks of ownership: buyers pay a deposit of 25% pf the sales price 6. A contractor building a bridge for the government

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

46. 4G
11:25
Receipt of cash
1.
Devising an Idea
8.
2.
Making purchases
(e.g. of inventories)
Delivery of goods
to customers
Receipt of orders after
completing producțion
3.
Receipt of orders before
commencing production
4.
Completion of
production
Commencing
production
5.
Progressivaly
throughout production
The operating cycle (Source: AARF, ED 51B)
Using the operating cycle provided above,
identify in each case at what point in the
operating cycle (1-9) the revenue should
be recognised. Provide full justification
and give basis for your choice.
1. A soft-drink manufacturer
2. A legal firm
3. A theatre that sells season tickets
to musical productions
4. A gold-mining company
5. A company which sells houses on
an instalment plan: term of payment
extending to 20 years: buyers
assume all risks of ownership:
buyers pay a deposit of 25% pf the
sales price
6. A contractor building a bridge for
the government

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