Question 1

In general, the completed contract method is a more conservative method of accounting for a long-term contract than the percentage of completion method.

Accepted Answer

A) True 
 B)False

Question 2

The SEC would require a company to recognize revenue on a sale once the goods have been delivered, regardless of whether collection of the sales price is reasonably assured.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements about the SEC's criteria for revenue recognition is incorrect?

Accepted Answer

A)  Normally, collectability needs to be reasonably assured. 
B)  The seller's price must be fixed or determinable. 
C)  Delivery of goods or services must have occurred. 
D)  There must be a written, signed contract as evidence of an agreement between the buyer and seller. 
A)  Normally, collectability needs to be reasonably assured. 
B)  The seller's price must be fixed or determinable. 
C)  Delivery of goods or services must have occurred. 
D)  There must be a written, signed contract as evidence of an agreement between the buyer and seller.

Question 4

One reason that a company might report a deferred tax liability is because it owns stock in another company that has increased in value.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not one of the revenue recognition methods used in the situation where a company makes a single sale, and has agreed to receive payments in installments over time?

Accepted Answer

A)  Percentage of completion 
B)  Cost recovery 
C)  Installment 
D)  Immediate recognition 
A)  Percentage of completion 
B)  Cost recovery 
C)  Installment 
D)  Immediate recognition

Question 6

The Jones Company makes sales on an installment basis. In 2016, it sells items with a cost of $20 million. The total sales price is $25 million. Ignoring interest payments, customers pay in five equal installments, of $5 million each, with one payment in each of 2016, 2017, 2018, 2019, and 2020. If the company uses the installment method of accounting for this sale, the gross profit it will recognize in 2020, the year the last installment payment is received, is

Accepted Answer

A)  Zero 
B)  $1 million 
C)  $5 million 
D)  $25 million 
A)  Zero 
B)  $1 million 
C)  $5 million 
D)  $25 million

In general, the completed contract method is a more conservative method of accounting for a long-term contract than the percentage of completion method.

The SEC would require a company to recognize revenue on a sale once the goods have been delivered, regardless of whether collection of the sales price is reasonably assured.

Which of the following statements about the SEC's criteria for revenue recognition is incorrect?

One reason that a company might report a deferred tax liability is because it owns stock in another company that has increased in value.

Which of the following is not one of the revenue recognition methods used in the situation where a company makes a single sale, and has agreed to receive payments in installments over time?

How Accounting Works

Selecting Your Business Structure

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Tackling the General Ledger

Reconciling Bank and Credit Card Statements

Understanding Insurance

Other Benefits and Reimbursements

Payroll Taxes

Appendix

Filters

Exam 9: Setting up New Team Members

In general, the completed contract method is a more conservative method of accounting for a long-term contract than the percentage of completion method.

The SEC would require a company to recognize revenue on a sale once the goods have been delivered, regardless of whether collection of the sales price is reasonably assured.

Which of the following statements about the SEC's criteria for revenue recognition is incorrect?

One reason that a company might report a deferred tax liability is because it owns stock in another company that has increased in value.

Which of the following is not one of the revenue recognition methods used in the situation where a company makes a single sale, and has agreed to receive payments in installments over time?

How Accounting Works

Selecting Your Business Structure

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Tackling the General Ledger

Reconciling Bank and Credit Card Statements

Understanding Insurance

Other Benefits and Reimbursements

Payroll Taxes

Appendix

Filters