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C249 CH18

Revenue Recognition

QuestionAnswer
Which of the following is true of the converged standard on revenue recognition? It recognizes and measures revenue based on changes in assets and liabilities.
Which of the following is the last step in the process for revenue recognition? Which of the following is the last step in the process for revenue recognition?
Two steps in the revenue recognition process are marginally different, because the ________ step outlines the performance obligations in the contract, while the ________ step highlights transaction prices associated with the performance obligations. second; fourth
When is revenue considered to be earned? Revenue is earned when a company has substantially completed its performance obligation in order to be entitled to the benefits represented by the revenues.
Which of the following works to measure revenue based on changes to a company’s assets and liabilities? asset-liability approach
Marcus and a customer are discussing a newly drafted contract. While going through the contract, the customer has a number of very specific questions about the performance obligations in the contract. What is this an example of? step 2 of the revenue recognition process
Identifying the contract with customers is the ________ step in the process for revenue recognition. 1st
To address inconsistencies and weaknesses, a comprehensive revenue recognition standard was developed. What was the name of that standard? Revenue from Contracts with Customers
True or False: Within the accounting period when the performance obligation is satisfied, the revenue is recognized. true
True or False: At the point of sale, generally meaning delivery, companies commonly recognize revenues from manufacturing and selling activities. True
How many standards did the IFRS have regarding revenue recognition before the Revenue from Contracts with Customers was issued? 1
Which of the following was a major difference between the IFRS and GAAP in terms of their previous accounting for revenues? The IFRS approaches are primarily principles-based, while GAAP uses mostly rules-based approaches.
Which of the following is true of the converged standard on revenue recognition? It recognizes and measures revenue based on changes in assets and liabilities.
Recognizing revenue when each performance obligation is satisified is the ________ step in the process for revenue recognition. 5th
How are the second and fourth steps in the revenue recognition process different from one another? The second step works to outline the performance obligations, while the fourth step discusses the transaction prices associated with the obligations.
When is revenue earned from permitting others to use enterprise assets recognized? as time passes
Marci is going over a contract with a client. They are discussing the individual performance obligations that are detailed within the contract, and will therefore be carried out. What step is this in the revenue recognition process? 2nd
When goods or services are exchanged for cash or claims to cash (receivables), which of the following is true of revenues? They are realized.
During which step of revenue recognition would a price be set for for the transfer of a good or service? 3
During which of the following steps of the revenue recognition process would an agreement be reached that includes both rights and obligations for both parties? 1
How many steps are there in the revenue recognition process? 5
True or False: In order to overstate revenues and window-dress the financial statements, both trade loading and channel stuffing are used. True
Which of the following is the third step in the process for revenue recognition? determine the transaction price
Which of the following is the second step in the process for revenue recognition? identify the separate performance obligations in the contract
Which of the following represents the last step in the process for revenue recognition? recognize revenue when each performance obligation is satisfied
When is revenue from selling assets other than inventory generally recognized? at the date of sale
Which of the following is the fourth step in the process for revenue recognition? allocate transaction price to the separate performance obligations
Which of the following is the first step in the process for revenue recognition? identify the contract with customers
Which of the following occurs at the end of the revenue recognition process? A change in control of the asset(s) occurs.
When a company is able to receive benefits from an asset, as well as direct the use of that asset, it implies that they have control of the asset.
Cora entered into a contract to have new cabinets built in her kitchen. At what point in the revenue recognition process will the construction company recognize the revenue from this sale? 5
When does the signing of a contract result in a journal entry? when one or both parties perform under the contract
If a contract modification does not result in a separate performance obligation, how are the additional products priced? at the blended price of original contract and contract modification
When does a company need to account for a contract modification as a new contract? If goods or services are distinct and company has right to receive the standalone price.
True or False: The same amount of revenue is recognized before and after the modification whether a contract modification is treated as a separate performance obligation or prospectively. True
True or False: Revenue from a contract with a customer can only be recognized once a contract exists. True
Which of the following is true of a contract? It is an agreement that creates enforceable rights and obligations.
When a contract is wholly unperformed and the parties can terminate the contract without compensation, then revenue guidance should be Disregarded
In order for a contractual promise to provide goods or services to be considered a performance obligation, the promise must be explicit. False
What is channel stuffing? Channel stuffing is when companies sell more product to a customer then that customer can sell. This boosts their sales figures and allows the company to show growth in sales, when more than likely the company would receive the merchandise back.
Created by: tbeeche
 

 



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