I dont understand ANY of this

uy applying the realization principle, and expl ost airlines sell tickets well before the scheduled date of the flight. based furniture store had a big sale, featuring furniture sold; periods that payments are received from LO3-6, L03-7, LO3-10 CASE 3.2 Measuring Income Fairly ons revenue: Most magazine publishers sell subscriptions for future deliv- Sazine. (Period subscription sold; periods that magazines are mailed to customers) t Shop, Inc., a printing business, from Chris Stanley, Morris made a agreed to make annual payments equal to 40 percent of the company's net a. Airline ticket revenue: Most airlines sell (Period ticket sold; period of flight) b. Sales on account: In June 2015, as "No payments until 2016." (Period furniture so customers) c. Magazine subscriptions revenue: Most may ery of the magazine. (Period subscription so Kim Morris purchased Print Shop, Inc., a prin cash down payment and agreed to make annual payments income in each of the next three years. (Such rear purchase of a small business.) Stanley was disappointed, business.) Stanley was disappointed, however, when Morris reported a first year's net income far below Stanley's expectations. cement between Morris and Stanley did not state precisely how net income was to be Morris nor Stanley was familiar with accounting concepts. Their agreement stated net income of the corporation should be measured in a "fair and reasonable manner." In measuring net income, Morris applied the following policies. 1. Revenue was recognized when cash was received from customers. Most customers paid in cash, but a few were allowed 30-day credit terms. 2. Expenditures for ink and paper, which are purchased weekly, were charged directly to Sup- plies Expense, as were the Morris family's weekly grocery and dry cleaning bills. 3. Morris set her annual salary at $60,000, which Stanley had agreed was reasonable. She also paid salaries of $30,000 per year to her husband and to each of her two teenage children. These family members did not work in the business on a regular basis, but they did help out when things got busy. 4. Income taxes expense included the amount paid by the corporation (which was computed cor- rectly), as well as the personal income taxes paid by various members of the Morris family on the salaries they earned working for the business. Introductory Accounting auctory Accounting 1 Financial Accounting Chapter 3 The Accounting Cycle: Capturing Economic Events 5. The business had state-of-the-art printing equipment valued at $150,000 at the time purchased it. The first-year income statement included a $150,000 equipment exten to these assets. Instructions a. Discuss the fairness and reasonableness of these income-measurement policies. (Remembe these policies do not have to conform to generally accepted accounting principles. But de should be fair and reasonable.) b. Do you think that the net cash flow generated by this business (cash receipts less cash outlet is higher or lower than the net income as measured by Morris? Explain. 7. L03-10 Happy Trails, Inc., is a popular family resort just outside Yellowstone National Park. Sums the resort's busy season, but guests typically pay a deposit at least six months in advance : antee their reservations. The resort is currently seeking new investment capital in order to expand onerations oble Hau Trails and ving Derations. The