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  • Chapter 6 - Revenue Recognition Issues

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    sablu khan
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    A sale on credit of 100 CU carries a 100% chance that the seller will need to provide additional costs of 10 CU two years from the date of the sale. When the outcome of a transaction cannot be estimated reliably, revenue should not be recognized. Dividends should be recognized when the shareholders' right to receive payment is established.

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    A sale on credit of 100 CU carries a 100% chance that the seller will need to provide additional costs of 10 CU two years from the date of the sale. When the outcome of a transaction cannot be estimated reliably, revenue should not be recognized. Dividends should be recognized when the shareholders' right to receive payment is established.

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    187 visualizzazioni3 pagine

    Chapter 6 - Revenue Recognition Issues

    Caricato da

    sablu khan
    A sale on credit of 100 CU carries a 100% chance that the seller will need to provide additional costs of 10 CU two years from the date of the sale. When the outcome of a transaction cannot be estimated reliably, revenue should not be recognized. Dividends should be recognized when the shareholders' right to receive payment is established.

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    © All Rights Reserved
    Scarica in formato PDF, TXT o leggi online su Scribd
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    Chapter6Revenuerecognitionissues
    MultipleChoice
    Identifythechoicethatbestcompletesthestatementoranswersthequestion.

    1.Whichofthefollowingconditionsisnotrequiredtobesatisfiedtorecognizerevenue
    fromthesaleofgoods?
    a. Theenterprisehastransferredtothebuyerthesignificantrisksandrewardsof
    ownershipofthegoods.
    b. Theenterpriseretainsneithercontinuingmanagerialinvolvementtothedegree
    usuallyassociatedwithownership,noreffectivecontroloverthegoodssold.
    c. Thecashcorrespondingtothesaleofgoodshasbeencollected.
    d. Theamountofrevenuecanbemeasuredreliably.
    ANSWER:C
    Moderate
    POINTS: 0/1
    REF:
    page194

    2.Asaleoncreditof100CUtakesplacethatcarriesa100%chancethatthesellerwill
    needtoprovideadditionalcostsof10CUtwoyearsfromthedateofthesale.Whatis
    recordedinthebalancesheetatthetimeofthesale?
    a.
    b.

    c.
    d.

    ANSWER:C
    Moderate
    POINTS: 0/1
    REF:
    page195

    3.Whichofthefollowingconditionsdoesnotneedtobesatisfiedinordertoreliably
    estimatetheoutcomeofatransaction?
    a. Theamountofrevenuethatwillbeobtaineduponcompletioncanbemeasured
    reliably.
    b. Thecashcorrespondingtothetransactionhasbeencollected.

    c. Thestageorpercentageofcompletionofthetransactiononthebalancesheet
    datecanbemeasuredreliably.
    d. Thecostsincurredforthetransactionandthecoststocompletethetransaction
    canbemeasuredreliably.
    ANSWER:B
    Moderate
    POINTS: 0/1
    REF:
    page196

    4.Whentheoutcomeofatransactioncannotbeestimatedreliably,anditisnotprobable
    thatthecostsincurredwillberecovered,revenueshouldnotberecognized,andthe
    costsincurredshouldberecognizedimmediatelyasanexpense.Whichaccounting
    principleisputintopracticeinthiscase?
    a. Matchingprinciple
    b. Goingconcernprinciple
    c. Principleofprudence
    d. Accrualprinciple
    ANSWER:C
    Moderate
    POINTS: 0/1
    REF:
    page197

    5.Dividendsshouldberecognizedwhentheshareholdersrighttoreceivepaymentis
    established.Thistakesplace:
    a. Whenthebooksareclosed.
    b. Whenthebusinessisliquidated.
    c. Whentheboardofdirectorsdecidetodistributedividends.
    d. Whenthedecisiontodistributedividendsismadeintheshareholdersgeneral
    meeting.
    ANSWER:D
    Moderate
    POINTS: 0/1
    REF:
    page197

    6.Whichofthefollowingstatementsisfalse?
    a. Permanentdifferencesdonotreversethemselvesovertime.
    b. Incaseofpermanentdifferences,theaccountingandtaxapproachesgivethe
    sameaftertaxincome.
    c. Permanentdifferenceshavenofuturetaxconsequences.
    d. Permanentdifferencesarelinkedtothedifferencesinthetimingofrevenueand
    expenserecognitionbetweenaccountingandtaxrules.
    ANSWER:D
    Moderate
    POINTS: 0/1
    REF:
    page202

    7.Insomecountries,alatentgainonmarketablesecuritiesistaxableintheperiod
    incurred,butisreportedunderfinancialaccountingonlyatthetimeofthesale.What
    willbegeneratedbythistemporarydifference?
    a. Deferredtaxliability
    b. Deferredtaxrevenue

    c. Deferredtaxasset
    d. Deferredtaxexpense
    ANSWER:C
    Moderate
    POINTS: 0/1
    REF:
    page206

    8.Taxespayableaccountingconsistsinignoringatemporarydifferenceitrecognizes
    incometaxexpenseinthefinancialstatementsforshareholdersasidenticaltothe
    incometaxpayable.Thereisnolinkbetweenthetaxrecognizedandthetriggeringevent
    andthusthisprincipleisinoppositiontothe______
    a. Principleofprudence.
    b. Accrualprinciple.
    c. Goingconcernprinciple.
    d. Matchingprinciple.
    ANSWER:D
    Easy
    POINTS: 0/1
    REF:
    page209

    9.Thecompletedcontractmethodandthepercentageofcompletionmethodareboth
    usedfortherecognitionofincomepertainingtoalongtermcontract.Whendothese
    methodsimplythatpotentiallossesonacontractarerecognized?
    a. Whentheyincurred
    b. Attheendofthecontract
    c. Assoonastheycanbelegitimatelyestablished
    d. Noneoftheabove
    ANSWER:C
    Moderate
    POINTS: 0/1
    REF:
    page212

    10.WhichofthefollowingcategoriesofgovernmentassistanceisnotspecifiedbyIAS20?
    a. Contingentloans
    b. Forgivableloans
    c. Grantsrelatedtoincome
    d. Grantsrelatedtoassets
    ANSWER:A
    Moderate
    POINTS: 0/1
    REF:
    page221

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