1. What are the six alternative methods of revenue recognition? 2. What SEC regu
ID: 2482730 • Letter: 1
Question
1. What are the six alternative methods of revenue recognition?
2. What SEC regulation covers non-GAAP financial measure?
3. Within the Securities and Exchange Commission; what are three of the responsibilities of the Office of the Chief Accountant?
4. What is the difference between cash flow used for investments and the cash flow from operations called?
5. In addition to providing a report on the effectiveness of its disclosure controls and internal control over financial reporting, the company’s principal executive officer and principal financial officer are required to sign two certifications. What are these two certifications?
Explanation / Answer
1. The alternative method of revenue recogntion are :
Sales-basis Method
Percentage-of-completion method
With this method, the company responsible for delivering the product wants to be able to show its shareholders that it is generating revenue and profits even though the project itself is not yet complete.
Completed-contract method
Cost-recoverability method
Installment method
2.
The Securities and Exchange Commission (SEC) permits companies to present non-GAAP financial measures in their public disclosures as well as registration statements filed under the Securities Act of 1933 (Securities Act) and periodic reports filed under the Securities Exchange Act of 1934 (Exchange Act), subject to compliance with Regulation G and Item 10(e) of Regulation S-K (Item 10(e)). These regulations were adopted to ensure that investors are provided with financial information that is fulsome and not misleading.
3.
To accomplish Office of the Chief Accountant's stated mission, the office is divided primarily into three major groups; Accounting, Professional Practice and International Affairs. These three groups work collaboratively to serve as the principal adviser to the Commission on accounting and auditing matters.
The Office of the Chief Accountant is responsible for establishing and enforcing accounting and auditing policy to enhance the transparency and relevancy of financial reporting, and for improving the professional performance of public company auditors in order to ensure that financial statements used for investment decisions are presented fairly and have credibility.
4. Operating Cash flow.- In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities.
5.SEC Requires CEO and CFO Certification of Quarterly and Annual Reports
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