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Intermediate Accounting Study Set 7

Business

Quiz 8 :

Revenue Recognition

Quiz 8 :

Revenue Recognition

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The timing of revenue recognition is dependent upon the control of the good being in the hands of ________.
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A

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When a contract is expected to affect the risk, timing, or amount of the entity's future cash flows, the contract is said to have ________.
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C

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What are the five criteria that must be met for a contract with a customer to exist?
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1. All parties agree to the contract and commit to performing under the contract.
2. Each party's rights are identifiable.
3. The payment terms are identifiable.
4. The contract has commercial substance.
5. It is probable that the seller will collect the consideration to which it is entitled.

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If multiple contracts are negotiated as a package and have a single commercial objective, the contracts should be combined and accounted for as ________.
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The final step in the revenue recognition process is the allocation of the transaction price to the performance obligation.
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U.S. GAAP sets a higher threshold for the assessment of collectibility of consideration from a contract than IFRS.
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Able sells and delivers a piece of equipment to Smythe for $2,000 on August 1 and the equipment cost $1,300. The sale is a credit sale. How is this transaction accounted for under a periodic system of inventory?
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IFRS defines the probable collection from a credit sale as ________.
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Recognition of revenue as each performance obligation is satisfied is which step in the recognition process?
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Revenue recognition deals with the issues of timing and measurement of revenue.
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The local Mini Mart makes cash sales of $8,000 on April 5, 2019. The journal entry to record the transaction would be to ________. The firm uses the periodic inventory system.
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What are the five principal steps in the revenue recognition process?
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The first step in the revenue recognition process is to determine the transaction price.
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Able sells and delivers a piece of equipment to Smythe for $1,800 on August 1 and the equipment cost $1,200. The sale is a credit sale. How is this transaction accounted for under a perpetual system of inventory?
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A good or service must be explicitly identified in a contract in order to identify a performance obligation.
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Define the term "commercial substance."
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Approval of a contract by the parties must be in writing.
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Under U.S. GAAP, when a contract meets the collectibility criterion, this means ________.
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A performance obligation is a promise to transfer a good or service that is distinct.
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If a seller receives cash before the appropriate time to recognize revenue, the seller should treat the consideration as a liability.
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