ABSTRACT
This chapter shows how the company did its accounting and how it dealt with proposed changes to its accounting system. It discusses the company’s key accounting areas: the sales reporting system; the materials costs system; and the work-in-progress system. The chapter also discusses the proposed new revenue recognition system which attempted to replace these systems. In order to match the costs with the revenue, the chapter proposes that both the materials costs and the revenue should be accounted for on a straight-line basis. Fox River did not have an accounting policy for accrued income and had never used the accounting concept in their previous annual reports. The accounting policy note on turnover in their most recent annual report simply stated what was happening at the company that mounts invoiced for work not yet completed included in deferred income.
