Quiz – Revenue Recognition
Review the following information extracted from the accounts of Company A.
- What key features do you notice upon reviewing the information that might concern you?
- What financial ratios or other indicators support this?
- What could be the cause?
| MYR Million | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 |
| Revenue | 92.6 | 89.1 | 87.0 | 86.1 | 79.3 | 69.1 | 71.8 |
| Current billed receivables (1) | 50.6 | 57.1 | 61.2 | 66.4 | 58.1 | 42.5 | 44.7 |
| Accrued (unbilled) receivables (2) | 41.9 | 39.2 | 40.0 | 34.0 | 33.0 | 35.2 | 24.1 |
| Long-term instalment receivables (3) | 26.9 | 13.0 | 9.3 | 0.8 | 2.1 | 1.0 | 1.0 |
| Total Receivables | 119.4 | 109.2 | 110.5 | 101.2 | 93.1 | 78.7 | 69.8 |
| Net Income | 10.9 | 8.3 | |||||
| Cash flow from operations (4) | 1.4 | 9.4 |
Notes:
- Represents the value of current invoices receivable for work billed to customers.
- Represent the value of work carried out during the production period when systems are being developed prior to delivery to clients.
- Represents amounts due from customers more than 12 months from the balance sheet date. These contracts are typically for up to 5 years duration.
- Income and CFO information which is presented for 2 quarters only is to show the direction of travel in relation to net income and cash flow from operations.
Here is the answer of this quiz.
