A Purchase Order Received from a Client Would Trigger a Journal

question 133

True/False

A purchase order received from a client would trigger a journal entry under the earnings-based revenue recognition approach, but not on the contract-based approach.

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Definitions:

Schedule L

Used to provide additional details on financial status or transactions not captured in the main tax form; no longer in general use for most taxpayers.

Accounting Method

The systematic approach to recording and reporting financial transactions for a business, determining how income and expenses are recorded and recognized.

Financial Accounting

The field of accounting focused on the summarization, analysis, and reporting of financial transactions pertaining to a business to external entities.

Subchapter S Corporation

A corporation that meets specific Internal Revenue Code requirements and elects to be taxed as a pass-through entity, avoiding double taxation on its income.