Question 1

A consignment sale is an example of a principal-agent arrangement.

Accepted Answer

A) True 
 B)False

Question 2

Refer to Fare Jewelry.How much revenue should Fare recognize for 2017 on this transaction?

Accepted Answer

A) $0 
B) $125,000 
C) $200,000 
D) $500,000 
A) $0 
B) $125,000 
C) $200,000 
D) $500,000

Question 3

Under what conditions must a company use the completed-contract method?

Accepted Answer

There are three conditions under which t

Question 4

Explain the similarities and differences between the two methods of accounting for long-term contracts.

Accepted Answer

The two methods for accounting for long-

Question 5

ABC Company is holding goods with a selling price of $100,000 which cost them $60,000.On December 3,2017,ABC sold the goods to Timmons under a bill-and-hold arrangement.At the end of 2017,ABC still holds the goods.How much revenue should ABC recognize for 2017?

Accepted Answer

A) $100,000 
B) $60,000 
C) $40,000 
D) $0 
A) $100,000 
B) $60,000 
C) $40,000 
D) $0

Question 6

The percentage-of-completion method may utilize a cost-to-cost approach or an output measure approach.

Accepted Answer

A) True 
 B)False

Question 7

Refer to LaGrow Developers.Assuming that LaGrow uses the cost-recovery method,in its December 31,2017 balance sheet,the company would report ________.

Accepted Answer

A) $100,000 net installment accounts receivable 
B) $1,500,000 net installment accounts receivable 
C) $2,500,000 net installment accounts receivable 
D) $3,500,000 net installment accounts receivable 
A) $100,000 net installment accounts receivable 
B) $1,500,000 net installment accounts receivable 
C) $2,500,000 net installment accounts receivable 
D) $3,500,000 net installment accounts receivable

Question 8

Refer to Camey Construction.How much gross profit should Camey recognize in Year 1 assuming the use of the percentage-of-completion method?

Accepted Answer

A) $375,000 
B) $750,000 
C) $937,500 
D) $5,000,000 
A) $375,000 
B) $750,000 
C) $937,500 
D) $5,000,000

Question 9

What are the three steps in the process for determining the amount and timing of revenue recognition for multiple-element arrangements?

Accepted Answer

1.Determine whether the arrangement can

Question 10

Refer to Tullis Construction.How much should Tullis report as Accounts Receivable at the end of year 1 on the balance sheet assuming the use of the percentage-of-completion method?

Accepted Answer

A) $500,000 
B) $3,500,000 
C) $4,000,000 
D) $5,000,000 
A) $500,000 
B) $3,500,000 
C) $4,000,000 
D) $5,000,000

Question 11

What is a major difference between GAAP and IFRS with regard to recognition of revenue?

Accepted Answer

A) Under IFRS,the seller does not have to transfer risks and rewards of ownership to the buyer. 
B) IFRS does not require delivery of goods for revenue to be recognized. 
C) Under IFRS,the price of the goods does not have to be fixed or determinable. 
D) Under IFRS,the seller may retain managerial involvement over the goods after sale. 
A) Under IFRS,the seller does not have to transfer risks and rewards of ownership to the buyer. 
B) IFRS does not require delivery of goods for revenue to be recognized. 
C) Under IFRS,the price of the goods does not have to be fixed or determinable. 
D) Under IFRS,the seller may retain managerial involvement over the goods after sale.

Question 12

The percentage-of-completion method and completed-contract method are interchangeable alternatives for revenue recognition.

Accepted Answer

A) True 
 B)False

Question 13

Refer to Thompson Industries.Assume that Thompson Industries uses the installment sales method.The buyer of the land defaulted on the sales agreement after making the down payment and the first installment.At the time of repossession,the land was worth $500,000.
Required:
Prepare the journal entry to record the repossession.

Accepted Answer

The answer of Refer to Thompson Industries.Assume that Thompson Industries...

Question 14

A company that collects revenues in advance over an extended time period should disclose all the following information except ________.

Accepted Answer

A) unearned revenue 
B) amount of revenue recognized in earnings 
C) amount of cash received from customers 
D) estimated uncollectible revenues 
A) unearned revenue 
B) amount of revenue recognized in earnings 
C) amount of cash received from customers 
D) estimated uncollectible revenues

Question 15

For revenues earned over an extended time period,a company should disclose the unearned revenue.

Accepted Answer

A) True 
 B)False

Question 16

The completed-contract method recognizes gross profit over the life of the contract.

Accepted Answer

A) True 
 B)False

Question 17

Losses on unprofitable contracts are recognized ratably over the life of the contract.

Accepted Answer

A) True 
 B)False

Question 18

Refer to LaGrow Developers.Assuming that LaGrow uses the installment sales method,in its December 31,2016 balance sheet,the company would report ________.

Accepted Answer

A) $3,000,000 net installment account receivable 
B) $4,000,000 net installment account receivable 
C) $2,600,000 net installment account receivable 
D) $5,000,000 net installment account receivable 
A) $3,000,000 net installment account receivable 
B) $4,000,000 net installment account receivable 
C) $2,600,000 net installment account receivable 
D) $5,000,000 net installment account receivable

Question 19

Refer to Thompson Industries.Assume that Thompson Industries uses the cost-recovery method.Prepare all journal entries related to the sale of land,the collection of cash,and the recognition of gross profit.

Accepted Answer

The answer of Refer to Thompson Industries.Assume that Thompson Industries...

Question 20

According to the FASB,when a seller has collected cash,the earnings process is virtually complete.

Accepted Answer

A) True 
 B)False

Exam 9: OL: Revenue Recognition

A consignment sale is an example of a principal-agent arrangement.

Refer to Fare Jewelry.How much revenue should Fare recognize for 2017 on this transaction?

Under what conditions must a company use the completed-contract method?

Explain the similarities and differences between the two methods of accounting for long-term contracts.

ABC Company is holding goods with a selling price of $100,000 which cost them $60,000.On December 3,2017,ABC sold the goods to Timmons under a bill-and-hold arrangement.At the end of 2017,ABC still holds the goods.How much revenue should ABC recognize for 2017?

The percentage-of-completion method may utilize a cost-to-cost approach or an output measure approach.

Refer to LaGrow Developers.Assuming that LaGrow uses the cost-recovery method,in its December 31,2017 balance sheet,the company would report ________.

Refer to Camey Construction.How much gross profit should Camey recognize in Year 1 assuming the use of the percentage-of-completion method?

What are the three steps in the process for determining the amount and timing of revenue recognition for multiple-element arrangements?

Refer to Tullis Construction.How much should Tullis report as Accounts Receivable at the end of year 1 on the balance sheet assuming the use of the percentage-of-completion method?

What is a major difference between GAAP and IFRS with regard to recognition of revenue?

The percentage-of-completion method and completed-contract method are interchangeable alternatives for revenue recognition.

A company that collects revenues in advance over an extended time period should disclose all the following information except ________.

For revenues earned over an extended time period,a company should disclose the unearned revenue.

The completed-contract method recognizes gross profit over the life of the contract.

Losses on unprofitable contracts are recognized ratably over the life of the contract.

Refer to LaGrow Developers.Assuming that LaGrow uses the installment sales method,in its December 31,2016 balance sheet,the company would report ________.

Refer to Thompson Industries.Assume that Thompson Industries uses the cost-recovery method.Prepare all journal entries related to the sale of land,the collection of cash,and the recognition of gross profit.

According to the FASB,when a seller has collected cash,the earnings process is virtually complete.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

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