Yvonne Nagano Has Decided to Open a Small Business to Keep

question 8

Essay

Yvonne Nagano has decided to open a small business to keep her busy during her upcoming retirement.She borrowed some money from the bank and has opened a café that will double as a used CD and DVD store.Customers can bring in their old CDs or DVDs and leave them on consignment.They can enjoy a cup of coffee, listen to the CDs available in the store and buy others' CDs or DVDs.Ms.Nagano is hoping that this will supplement her retirement income a little as well as keep her busy.
Required:
A) What financial reporting objectives should Ms.Nagano adopt when preparing her financial statements? If there is more than one, which objective do you think should dominate?
B) Select the revenue recognition policies that Ms Nagano should use in the café.Support your selection with the GAAP revenue recognition criteria.

• A) What financial reporting objectives should Ms.Nagano adopt when preparing her financial statements? If there is more than one, which objective do you think should dominate?
• B) Select the revenue recognition policies that Ms Nagano should use in the café.Support your selection with the GAAP revenue recognition criteria.

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Definitions:

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