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a. Research and identify current technologies in use in the revenue, expenditure or conversion subsystem and explain how these technologies affect the operational and control implications for that subsystem.

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a. Research and identify current technologies in use in the revenue, expenditure or conversion subsystem and explain how these technologies affect the operational and control implications for that subsystem.

Category: Descriptive Essay

Subcategory: Accounting

Level: College

Pages: 3

Words: 825

Technologies in use in the revenue and expenditure or conversion subsystem
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Technologies in use in the revenue and expenditure or conversion subsystem
Currently, there are new technologies that are being used to recognize revenues and expenditure among different entities. The new models have challenges and potential issues that ought to be recognized before they are implemented. The new models will bring about changes when reporting and disclosing various accounting information to their users.
The International Accounting Standards and the Financial Accounting Standards Board have a new system of operation while dealing with revenue. The new standard has been branded ASU 2014-091 and IFRS 152 by the Financial accounting standards board and the International Accounting Standards Board respectively. The new technological provides a single model that is one fit all and supposed to be used by different companies while dealing with their accounting for revenue. These are transactions that arise as a result of business operations with customers and are different from those of old (Li, 2009).
Under the new system, there are different goods that are not considered as being distinct in their performance obligation. These are products that are promised within the premise of a contract and are dependent highly. However, the application of this new technological approach towards revenues does require proper judgment.
Under the arrangement of software, the recognition of revenue will not be deferred, this only happens when vendor-specific objective evidence of the fair value is unknown for services and goods that are undelivered. This applies because revenue is usually allocated to all obligations within a set selling price that is set. The inconsistency of contracts makes revenues be recorded on the likelihood that a reversal of revenue will not happen (Skugge, 2007).
When dealing with products such as intellectual property, the recording of revenue is done when it is determined. This is the period when the selling process has ended, and both the seller and buyer are happy with the involved exchange. Providers of licenses to use software will need to consider whether to provide the right to use the intellectual property as it exists the whole time or a point in time. The extensive disclosures needed by the new technology will force technologically savvy corporations to make modifications to their systems to get information concerning their customers.
The newly created standard will bring changes into entities that provide their products for sell through the use of middlemen. Recognition of revenue will only be possible when a product has reached the end, a user. This is because prices charged to resellers are never finalized before the transaction is complete. However, revenue will be recognized earlier in advance because companies will need to make considerations to their prices before selling to resellers.
Entities and the government at large are always encouraged to track and take care of their expenditure. They have made this possible by providing information that pertains to their expenditure to make ways of assessing their revenue. Expenditures are costs that are usually grouped with revenues in the income statement. The cost of Goods Sold is usually matched with sales while other expenditures like wages, insurance, interest and insurance are matched with their occurrence on top of the income statement.
Currently, expenditures are debited to their expense accounts with a credit account that is usually cash. Crediting of cash only happens when it is paid during the time of executing the expense in question. However, expenditures are also indicated as accounts payable when paid after the recording of the expense and prepaid expense when the cash is paid before the recording of the expense.
A vital aspect of recording expenditures currently is whether they are recorded immediately they occur or as a capital expenditure. And expense that is due to depreciation cannot be recorded as an expense because the lapse of time has not been met. The use of accrual basis accounting helps in recording such expenses when the products are depreciated (Schiemann, 2013).
The term of an expense is usually important when determining if it is an income or capital expense. Such a problem can only be solved if the expense in question is viewed as a purchase. When the purchase is made, and the product no longer holds the value it becomes and expense. When it continues to have value over a period it is viewed as capital, and always amortized and placed in the balance sheet.
This nature of disclosure for revenue is not very different from that of old as it holds similar principles. It, however, allows entities to determine the methods that will be suitable for their accounting and also make judgments on their revenue recognition capabilities. Expenditures are crucial as they indicate the direction a certain entity is taking.
In conclusion, entities have the mandate to reassess their accounting provisions for expenditure and revenue to determine if there is a need to make changes. This is because the new models require them to make disclosures of their qualitative and quantitative information, which is lacking in most entities. The collectability threshold that is provided by the new models may lead to few users because most entities are never credible when it comes to providing accurate information.

Li, T., Heck, E. van, & Vervest, P. (2009). Information capability and value creation strategy: advancing revenue management through mobile ticketing technologies. European Journal of Information Systems, 18(1), 38-51.
Schiemann, F., & Guenther, T. (2013). Earnings predictability, value relevance, and employee expenses. International Journal of Accounting, 48(2), 149-172.
Skugge, G. (2007). Future of revenue management: Capture your current potential! Journal of Revenue and Pricing Management, 6(3), 241-243.

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