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Hamdy A. Rashed 
2012‐01‐29
Practical & Integrated 
Accounting Awareness 
For Yemeni who are interesting in knowing about accounting 
area 
Collected by: Hamdy A. Rashed, CMA, CAPM 
 
Practical & Integrated Accounting Awareness  2012 
 
Hamdy A. Rashed | www.hamrconsult.yolasite.com 
 
2 
Contents 
Chapter 7: Revenue, Receivables & Prepayments ........................................................................................ 4 
Accounting Techniques ............................................................................................................................. 4 
Revenue Recognition ............................................................................................................................ 4 
1) Revenue recognition at point of sale (delivery) ............................................................................ 4 
2) Revenue recognition before delivery ........................................................................................... 9 
3) Revenue recognition after delivery ............................................................................................ 12 
4) Revenue recognition for special sales transactions‐franchises and consignments. ................... 16 
Accounts Receivables and Prepayments ............................................................................................ 18 
Financial Reporting ................................................................................................................................. 26 
Revenue .............................................................................................................................................. 26 
Accounts/Notes Receivables and Prepayments ................................................................................. 30 
Trade and other receivables ................................................................................................................... 31 
Internal Controls ..................................................................................................................................... 32 
Control Environment ........................................................................................................................... 32 
Control Activities ................................................................................................................................. 32 
Management Accounting ........................................................................................................................ 37 
Financial Analysis ................................................................................................................................ 37 
Financial Management........................................................................................................................ 39 
Operating leverage and Break‐even Point ...................................................................................... 39 
Credit and Receivables Management ............................................................................................. 40 
Market and Statistical Analysis ........................................................................................................... 43 
Pricing Decision Analysis ..................................................................................................................... 50 
Audit View ............................................................................................................................................... 54 
Revenue Transactions and Accounts Receivables Balances ............................................................... 54 
Audit objectives for Revenue .......................................................................................................... 54 
Audit objectives for accounts receivables ...................................................................................... 54 
Materiality of revenue cycle ........................................................................................................... 54 
Inherent Risk of revenue cycle ........................................................................................................ 55 
Substantive Analytical Procedures .................................................................................................. 56 
Substantive test of details ............................................................................................................... 57 
Practical & Integrated Accounting Awareness  2012 
 
Hamdy A. Rashed | www.hamrconsult.yolasite.com 
 
3 
Audit Working Papers ......................................................................................................................... 63 
Forensic Accounting. ............................................................................................................................... 66 
Fraud Risk Scenario ............................................................................................................................. 69 
Lapping ............................................................................................................................................ 69 
Fictitious Receivables and Ghost Sales ........................................................................................... 69 
Borrowing Against Accounts Receivables ....................................................................................... 69 
Hyped Sales ..................................................................................................................................... 69 
Overstated Revenue ....................................................................................................................... 70 
Money Laundering .......................................................................................................................... 70 
Fraud Red Flags: .................................................................................................................................. 73 
Fraud Detection Procedures ............................................................................................................... 74 
Legal Business Environment ................................................................................................................... 76 
Consumer Protection .......................................................................................................................... 76 
Product and Service Liability ............................................................................................................... 78 
Debtor Protection ............................................................................................................................... 83 
Society Protection and Liability of Organization ................................................................................. 85 
Business Appraisal/Financial Valuation. ................................................................................................. 92 
 
   

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