A company has a performance obligation when it agrees to
A) Perform a service for a customer and receives cash payment.
B) Sell a product to a customer after receiving payment.
C) Perform a service or sell a product to a customer.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

A performance obligation can arise from either performing a service or selling a product to a customer, or both. Option A and B do describe transactions, but they do not necessarily fulfill the conditions for a performance obligation. Option D is incorrect as option C fulfills the requirements for a performance obligation.

A Company Has a Performance Obligation When It Agrees to