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|
|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|
|Cash flow from operations (4)||1.4||9.4|
- 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.