Question 1

In determining whether the promise to deliver goods and services is separate from other promises the accountant must often rely on ________.

Accepted Answer

A) professional skepticism 
B) professional judgment 
C) professional standards 
D) standards of conduct 
A) professional skepticism 
B) professional judgment 
C) professional standards 
D) standards of conduct B

Question 2

Refer to Shady Equipment.How much interest expense will Shady report over the term of the contract?

Accepted Answer

A) $16,640 
B) $66,640 
C) $50,000 
D) $36,640 
A) $16,640 
B) $66,640 
C) $50,000 
D) $36,640 A

Question 3

Refer to Greenwell Farms.How much interest revenue will Greenwell report on January 1,2016?

Accepted Answer

A) $42,867 
B) $4,286 
C) $0.00 
D) $4,000 
A) $42,867 
B) $4,286 
C) $0.00 
D) $4,000 C

Question 4

The transaction price is the amount of consideration the entity expects to be entitled to as a result of providing goods or services to the customer.

Accepted Answer

A) True 
 B)False

Question 5

What are the five principal steps in the revenue recognition process?

Accepted Answer

The five principal steps in the revenue

Question 6

If multiple contracts are negotiated as a package and have a single commercial objective,the contracts should be combined and accounted for as ________.

Accepted Answer

A) multiple contracts 
B) a single contract 
C) assets 
D) liabilities 
A) multiple contracts 
B) a single contract 
C) assets 
D) liabilities

Question 7

Refer to Aztec Company.Assuming Aztec estimates that the transaction price is the most likely value.The transaction price is ________.

Accepted Answer

A) $800,000 
B) $900,000 
C) $950,000 
D) $975,000 
A) $800,000 
B) $900,000 
C) $950,000 
D) $975,000

Question 8

Able sells a piece of equipment to Smythe for $1,800 on August 1.The equipment cost $1000.The equipment is picked up by Smythe on August 10.How many performance obligations are included in this transaction?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 9

Approval of a contract by the parties must be in writing.

Accepted Answer

A) True 
 B)False

Question 10

In determining the transaction price,when does a significant financing component exist?

Accepted Answer

A significant financing component may oc

Question 11

Explain a bill-and-hold arrangement.

Accepted Answer

A bill-and-hold arrangement is a transac

Question 12

The transaction price is always the price stated in the contract.

Accepted Answer

A) True 
 B)False

Question 13

Refer to Brutus Construction.Calculate gross profit or loss for 2016 and 2017 using the percentage of completion method.

Accepted Answer

The answer of Refer to Brutus Construction.Calculate gross profit or...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The final step in the revenue recognition process is the allocation of the transaction price to the performance obligation.

Accepted Answer

A) True 
 B)False

Question 16

The method of reporting gross profit for long term contracts that does a better job of providing relevant information on the income statement is the ________.

Accepted Answer

A) completed-contract-method 
B) installment sales method 
C) cost recovery method 
D) percentage-of-completion method 
A) completed-contract-method 
B) installment sales method 
C) cost recovery method 
D) percentage-of-completion method

Question 17

If noncash consideration such as stock of a publicly-traded company is given in a revenue contract,then the value to be used for the transaction price should be ________.

Accepted Answer

A) fair market value 
B) book value 
C) historical cost 
D) net present value 
A) fair market value 
B) book value 
C) historical cost 
D) net present value

Question 18

Refer to Camey Construction.How much should Camey recognize as Accounts Receivable at the end of Year 1 assuming the use of the percentage-of-completion method?

Accepted Answer

A) $500,000 
B) $1,000,000 
C) $1,500,000 
D) $2,000,000 
A) $500,000 
B) $1,000,000 
C) $1,500,000 
D) $2,000,000

Question 19

Refer to Kramer Iron Works.Allocate the transaction price using the standalone approach.

Accepted Answer

The answer of Refer to Kramer Iron Works.Allocate the transaction...

Question 20

Refer to Craft Construction.Assume that Craft uses the completed-contract method for revenue recognition.Make the appropriate journal entries for 2016 and 2017 for Craft Company.

Accepted Answer

The answer of Refer to Craft Construction.Assume that Craft uses...

Exam 8: Revenue Recognition

In determining whether the promise to deliver goods and services is separate from other promises the accountant must often rely on ________.

Refer to Shady Equipment.How much interest expense will Shady report over the term of the contract?

Refer to Greenwell Farms.How much interest revenue will Greenwell report on January 1,2016?

The transaction price is the amount of consideration the entity expects to be entitled to as a result of providing goods or services to the customer.

What are the five principal steps in the revenue recognition process?

If multiple contracts are negotiated as a package and have a single commercial objective,the contracts should be combined and accounted for as ________.

Refer to Aztec Company.Assuming Aztec estimates that the transaction price is the most likely value.The transaction price is ________.

Able sells a piece of equipment to Smythe for $1,800 on August 1.The equipment cost $1000.The equipment is picked up by Smythe on August 10.How many performance obligations are included in this transaction?

Approval of a contract by the parties must be in writing.

In determining the transaction price,when does a significant financing component exist?

Explain a bill-and-hold arrangement.

The transaction price is always the price stated in the contract.

Refer to Brutus Construction.Calculate gross profit or loss for 2016 and 2017 using the percentage of completion method.

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

The final step in the revenue recognition process is the allocation of the transaction price to the performance obligation.

The method of reporting gross profit for long term contracts that does a better job of providing relevant information on the income statement is the ________.

If noncash consideration such as stock of a publicly-traded company is given in a revenue contract,then the value to be used for the transaction price should be ________.

Refer to Camey Construction.How much should Camey recognize as Accounts Receivable at the end of Year 1 assuming the use of the percentage-of-completion method?

Refer to Kramer Iron Works.Allocate the transaction price using the standalone approach.

Refer to Craft Construction.Assume that Craft uses the completed-contract method for revenue recognition.Make the appropriate journal entries for 2016 and 2017 for Craft Company.

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

OL: 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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