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Problems and Countermeasures of Accounting Income Confirmation in Chinese Enterprises
I will give you one. You can only refer to it, not copy it, or you will be at your own risk. Abstract: Confirmation and measurement are two procedures for recording and recording in financial statements. The recognition of income, especially when, is one of the most complicated problems in financial accounting. Starting with the basis and principles of revenue recognition, this paper expounds the problems encountered in the practical application of revenue recognition and the solutions of new accounting standards.

Keywords: accounting standards; Income; confirm

Accounting confirmation refers to the accounting behavior of objectively identifying the economic matters of the accounting subject according to certain standards and incorporating them into accounting elements such as assets, liabilities, owners' equity, income, expenses and profits. , and formally recorded in the books, included in the accounting statements. In the whole accounting procedure, confirmation is the first barrier to decide whether an item should be included in a certain element of financial statements. Confirmation requires that a project be described in words and figures, and its amount must be included in the total record of financial statements. Confirm that a project and related information should meet four basic standards, namely definability, measurability, relevance and reliability. Confirmation is important because it represents the identification, judgment and decision-making stages in accounting behavior. Only when it is confirmed correctly, can it be recorded and reported correctly, and can it also produce useful information for accounting information users to make decisions. Whether, when and how much income can be confirmed is a difficult problem in financial accounting, and it is also a common method for some enterprises to "whitewash statements" and financial fraud, because the confirmation and measurement of income will involve the calculation of enterprise profits and losses, and ultimately affect the decision-making of various interest groups.

1 Basis and principle of revenue recognition

Recognition basis 1. 1 revenue-accrual basis

After the formation of modern enterprises, due to the separation of ownership and management rights, fiduciary responsibility has become a common concern of owners and operators, and has gradually become the goal of financial accounting. Accrual basis is derived from this economic environment.

From the perspective of double-entry bookkeeping, the increase of assets or the decrease of liabilities will be recognized at the same time as an income; When an expense is recognized, it will also recognize a decrease in assets or an increase in liabilities. Accrual basis actually involves the recognition of all accounting elements. But income is the most complicated factor in accounting, and the confirmation of income, especially when, may be one of the most complicated problems in financial accounting. The confirmation of income means that the right to receive income has occurred, and the confirmation of related expenses means that the responsibility for paying expenses has been determined. Therefore, accrual basis is mainly the recognition of income and expenses.

1.2 revenue recognition principle-substance is more important than form

In the Accounting Standards for Business Enterprises-Income (hereinafter referred to as Income Standards), the recognition and measurement of income from three types of transactions or events, namely, the sale of goods, the provision of labor services and the use of assets by others, are stipulated. At the same time, considering the particularity of construction contracts, non-monetary transactions, leasing, insurance contracts of insurance companies, futures, investment, debt restructuring and other transactions and matters, their confirmation principles are stipulated in their respective specific standards. From the content of each confirmation, it embodies the principle that substance is more important than form than before, that is, the condition of income confirmation is not the delivery of ownership certificate or physical form, but the transfer of main risks and rewards in commodity ownership.

How to confirm the income of 1.3?

In the income standard, income is defined as "the total inflow of economic benefits formed in daily activities such as selling goods, providing services and using enterprise assets, excluding the money collected for third parties or customers". From this definition, it can be decomposed into three important characteristics of income. First, the economic benefits of daily activities; Second, this kind of interest inflow is obtained by enterprises selling goods, providing services and letting others use their assets; Third, the inflow of economic benefits does not include the money received. In this way, accountants can confirm income from these three characteristics.

The recognition of income requires the professional judgment of accountants. When every income-related transaction or event occurs, it is necessary to identify whether the corresponding income items should be formally recorded in accounting, when they should be recorded and included in the statements, and whether the items recorded or included in the statements meet the four basic standards (definable, measurable, relevant and reliable). In addition, we should also consider whether the income matches its related costs and expenses, whether the income is greater than the cost, and whether the income items that should be recorded and included in the report conform to the principle of materiality.

2 revenue recognition in the actual application status

2. 1 revenue trap

As income is an economic matter that leads to the increase of assets or the decrease of liabilities or both, it is the source of enterprise profits, and the importance of profits to enterprises is self-evident. The accrual basis is adopted, so it is very particular about how, when and under what conditions to determine the occurrence of rights and then determine profits. Some companies' financial statements have the following traps in the recognition of operating income:

2. 1. 1 Change the confirmation method of sales revenue. Some companies don't sell a single product, but sell the whole system, which needs implementation, installation and service. The sales process lasts for a long time, and the income is not realized at one time. Especially for the sales realized across years, it is necessary to distribute profits across years. General enterprises divide the proportion of income realization according to different stages of sales, and the change of this proportion will undoubtedly affect the current profit.

2. 1.2 fictitious income. This is the most serious financial fraud, and there are several ways: first, white bars are sold out of the warehouse; The second is to issue invoices to confirm income; The third is to falsely invoice and confirm the income. For example, a listed company uses a subsidiary to sell to a third party at the market price, confirms the sales income of the subsidiary, and then another subsidiary repurchases it from a third party. This practice avoids the constraint that intra-group transactions must be offset, ensures the confirmation of income and profit in consolidated statements, and achieves the purpose of operating income.

2. 1.3 Confirm the income in advance. This situation is as follows: first, some uncertain income is determined as income; Second, the percentage of completion method is improperly used; Third, the income and expenditure do not match; The fourth is to issue invoices in advance to beautify performance. The method of confirming income in advance is mainly used for enterprises with low income and high expenses in the current period, especially real estate and high-tech industries.

2. 1.4 deferred revenue recognition. Deferred income recognition refers to deferring the income that should be recognized in the current period to a later period. Just like recognizing income in advance, delaying the recognition of income is also a method of earnings management. This method is generally used when the current income of the enterprise is relatively abundant and it is expected that the future income will decrease.

2.2 Diversity and complexity of confirmation

In accounting standards, the basic standards and main principles recognized can only be summarized as follows:

(1) conform to the definition of income; The expected economic benefits flow into the enterprise; And can be reliably measured.

(2) The income has been realized or can be realized (the right to receive cash) and has been obtained (the whole process of obtaining income has been completed).

(3) The ownership and risks related to the sale of commodities have actually been transferred; Or substance is better than form.

Obviously, after a transaction or event happens, if it is only related to the sales income of commodities, whether and when it should be recognized as income requires accountants to use professional knowledge and practical work experience, that is, professional judgment to analyze and judge the transaction type, income type and whether there are additional conditions when selling, so that the ownership and risks related to commodities are not completely transferred after the seemingly clear surface phenomenon of money and commodities. Whether income should be recognized, when, what kind of records should be made, and how to correctly calculate it in financial statements. Therefore, it can be said that whether and when to confirm the sales revenue of commodities seems to be well-known accounting common sense. In fact, this is a very complicated and difficult question to answer.