Question 1

Which one of the following types of service costs are deferred and expensed only when the related service revenue is recognized?

Accepted Answer

A) initial indirect costs 
B) direct costs 
C) indirect costs 
D) initial direct costs 
A) initial indirect costs 
B) direct costs 
C) indirect costs 
D) initial direct costs

Question 2

The Key Largo Company uses the percentage-of-completion method to recognize profits on long-term contracts.At the end of the second year of the contract, a project was 70% complete and an overall loss of $100, 000 was expected.A $20, 000 profit had been recognized in the first year of the contract.The loss to be recognized in the second year is

Accepted Answer

A) $ 70, 000 
B) $ 80, 000 
C) $100, 000 
D) $120, 000 
E) none of these 
A) $ 70, 000 
B) $ 80, 000 
C) $100, 000 
D) $120, 000 
E) none of these

Question 3

If revenue is not recognized at the time of sale, which of the following accounts may be affected at the time of sale? $\begin{array}{lll}
&\text { Accounts } & \text { Deferred } \
&\text { Receivable } & \text { GrossProfit }\ 
\text {I.}&\text { No } & \text { No } \
\text {II.}&\text { Yes } & \text { Yes } \
\text {III.}&\text { No } & \text { Yes } \
\text {IV.}&\text { Yes } & \text { No }
\end{array}$

Accepted Answer

A) I 
B) II 
C) III 
D) IV 
A) I 
B) II 
C) III 
D) IV

Question 4

Accrual accounting is usually associated with

Accepted Answer

A) revenue recognition in the period of sale 
B) revenue recognition prior to the period of sale 
C) revenue recognition after the period of sale 
D) revenue recognition delayed until a future event occurs 
A) revenue recognition in the period of sale 
B) revenue recognition prior to the period of sale 
C) revenue recognition after the period of sale 
D) revenue recognition delayed until a future event occurs

Question 5

The entry that the consignee makes to record the commission earned on a sale of goods held on consignment is

Accepted Answer

A) $\begin{array} { l } 
\text { Cash } &XX\
\text { Consignment-in }&&XX
\end{array}$ 
B) $\begin{array} { l } 
\text { Consignment-in }&XX \
\text { Commissions Earned }&&XX
\end{array}$ 
C) $\begin{array} { l l } 
\text { Cash } & \mathrm { XX } \
\text { Commissions Earned } & &\mathrm { XX }
\end{array}$ 
D) $\begin{array} { l l } 
\text { Consignment-in } & \mathrm { XX } \
\text { Cash } & \mathrm { XX }
\end{array}$ 
A) $\begin{array} { l } 
\text { Cash } &XX\
\text { Consignment-in }&&XX
\end{array}$ 
B) $\begin{array} { l } 
\text { Consignment-in }&XX \
\text { Commissions Earned }&&XX
\end{array}$ 
C) $\begin{array} { l l } 
\text { Cash } & \mathrm { XX } \
\text { Commissions Earned } & &\mathrm { XX }
\end{array}$ 
D) $\begin{array} { l l } 
\text { Consignment-in } & \mathrm { XX } \
\text { Cash } & \mathrm { XX }
\end{array}$

Question 6

Exhibit 18-4 The following information is provided for Tampa Company:
 
-
Refer to Exhibit 18-4.How much gross profit did Tampa Company report in 2010?

Accepted Answer

A) $ 800 
B) $2, 000 
C) $3, 200 
D) $4, 000 
E) none of these 
A) $ 800 
B) $2, 000 
C) $3, 200 
D) $4, 000 
E) none of these

Question 7

Givens, Inc.repossessed an item it sold in 2010 with a gross profit of 40%.The fair value of the repossessed item was $140.The remaining receivable amounted to $400.What account had the smallest amount debited to it?

Accepted Answer

A) Allowance for Doubtful Installment Accounts Receivable 
B) Accounts Receivable 
C) Repossessed Inventory 
D) Deferred Gross Profit 
A) Allowance for Doubtful Installment Accounts Receivable 
B) Accounts Receivable 
C) Repossessed Inventory 
D) Deferred Gross Profit

Question 8

Which method of revenue recognition do IFRS require for construction contracts when the percentage-of-completion method cannot be applied?

Accepted Answer

A) completed contract 
B) installment sales 
C) completed contract. 
D) cost recovery 
A) completed contract 
B) installment sales 
C) completed contract. 
D) cost recovery

Question 9

If a company had an agreement to deliver software that requires significant production, modification, or customization, which method of revenue recognition should it use?

Accepted Answer

A) percentage-of-completion method 
B) deposit method 
C) installment method 
D) cost recovery method 
A) percentage-of-completion method 
B) deposit method 
C) installment method 
D) cost recovery method

Question 10

Which one of the following statements is not true?

Accepted Answer

A) The use of the installment method of recognizing revenue is generally unacceptable. 
B) When the installment method of recognizing revenue is in use, operating expenses are not deferred and recognized in the future. 
C) Deferred gross profit should be disclosed as a current liability on the balance sheet. 
D) A company may use the installment method of revenue recognition for a sales transaction that is not an installment sale. 
A) The use of the installment method of recognizing revenue is generally unacceptable. 
B) When the installment method of recognizing revenue is in use, operating expenses are not deferred and recognized in the future. 
C) Deferred gross profit should be disclosed as a current liability on the balance sheet. 
D) A company may use the installment method of revenue recognition for a sales transaction that is not an installment sale.

Question 11

When there is a very high degree of uncertainty about the collectibility of the sales price in a sale, the preferred method of revenue recognition is the

Accepted Answer

A) cost recovery method 
B) installment method 
C) deposit method 
D) proportional performance method 
A) cost recovery method 
B) installment method 
C) deposit method 
D) proportional performance method

Which one of the following types of service costs are deferred and expensed only when the related service revenue is recognized?

If revenue is not recognized at the time of sale, which of the following accounts may be affected at the time of sale? Accounts Deferred Receivable GrossProfit I. No No II. Yes Yes III. No Yes IV. Yes No

Accrual accounting is usually associated with

The entry that the consignee makes to record the commission earned on a sale of goods held on consignment is

Exhibit 18-4 The following information is provided for Tampa Company: - Refer to Exhibit 18-4.How much gross profit did Tampa Company report in 2010?

Givens, Inc.repossessed an item it sold in 2010 with a gross profit of 40%.The fair value of the repossessed item was $140.The remaining receivable amounted to $400.What account had the smallest amount debited to it?

Which method of revenue recognition do IFRS require for construction contracts when the percentage-of-completion method cannot be applied?

If a company had an agreement to deliver software that requires significant production, modification, or customization, which method of revenue recognition should it use?

Which one of the following statements is not true?

When there is a very high degree of uncertainty about the collectibility of the sales price in a sale, the preferred method of revenue recognition is the

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

The Income Statement and the Statement of Cash Flows

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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Exam 18: Income Recognition and Measurement of Net Assets

Which one of the following types of service costs are deferred and expensed only when the related service revenue is recognized?

If revenue is not recognized at the time of sale, which of the following accounts may be affected at the time of sale? Accounts Deferred Receivable GrossProfit I. No No II. Yes Yes III. No Yes IV. Yes No

Accrual accounting is usually associated with

The entry that the consignee makes to record the commission earned on a sale of goods held on consignment is

Exhibit 18-4 The following information is provided for Tampa Company: - Refer to Exhibit 18-4.How much gross profit did Tampa Company report in 2010?

Givens, Inc.repossessed an item it sold in 2010 with a gross profit of 40%.The fair value of the repossessed item was $140.The remaining receivable amounted to $400.What account had the smallest amount debited to it?

Which method of revenue recognition do IFRS require for construction contracts when the percentage-of-completion method cannot be applied?

If a company had an agreement to deliver software that requires significant production, modification, or customization, which method of revenue recognition should it use?

Which one of the following statements is not true?

When there is a very high degree of uncertainty about the collectibility of the sales price in a sale, the preferred method of revenue recognition is the

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

The Income Statement and the Statement of Cash Flows

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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