Justin Denman Accounting and Auditing Processes March 4, 2000 Writing Assignment #1 Revenue Recognition Policies The purpose of this paper is to compare the revenue recognition policies of two companies in the search, detection, navigation, guidance, and aeronautical systems industry. The two companies I have selected are Aerosonic Corporation, and Esco Electronics Company. Esco Electronics Company is engaged in the design, manufacture, sale and support of engineered products. These products are used principally in filteration/fluid flow applications, …showed first 75 words of 891 total…

…showed last 75 words of 891 total…is that a company like Aerosonic has one major customer, and that is U.S. government. Another important factor is that Aerosonic recognizes revenue when title transfers to the government. Since the two parties are closely related in a business sense, Aerosonic may have the incentive to push titles of products to the government to meet target revenues. Auditors should take care in determining whether or not the financial statements conform generally accepted accounting principles.