Question 1

According to Coombs and Martin when is revenue most likely to be recognised in the earning cycle?

Accepted Answer

A) Delivery of goods to customers 
B) Receipt of orders after completing production 
C) Receipt of cash 
D) Completion of production 
A) Delivery of goods to customers 
B) Receipt of orders after completing production 
C) Receipt of cash 
D) Completion of production A

Question 2

Under the IASB Framework revenue encompasses both income and gains.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of these is not an accepted exception to the recorded revenue at the time of sale?

Accepted Answer

A) Revenue recognised upon receipt of an order 
B) Revenue recognised at the end of production 
C) Revenue recognised when cash is received after the sale is made 
D) Revenue recognised during production 
A) Revenue recognised upon receipt of an order 
B) Revenue recognised at the end of production 
C) Revenue recognised when cash is received after the sale is made 
D) Revenue recognised during production A

Question 4

In which of these standards are gains and losses from remeasurement of assets included in either operating income or in 'comprehensive income'?

Accepted Answer

A) IAS 16/AASB 116 
B) IAS 19/AASB 119 
C) IAS 41/AASB 141 
D) All of the above 
A) IAS 16/AASB 116 
B) IAS 19/AASB 119 
C) IAS 41/AASB 141 
D) All of the above

Question 5

Which of these overestimates of revenue can occur within the accounting standards?

Accepted Answer

A) Shipping goods prematurely to buyers without a firm order and recognising revenue when the goods are shipped 
B) Making estimates which later prove to be over-optimistic 
C) Backdating sales made during the early part of the new accounting period to the last part of the old accounting period 
D) A and B can occur within the accounting standards 
A) Shipping goods prematurely to buyers without a firm order and recognising revenue when the goods are shipped 
B) Making estimates which later prove to be over-optimistic 
C) Backdating sales made during the early part of the new accounting period to the last part of the old accounting period 
D) A and B can occur within the accounting standards

Question 6

'The primary risk for auditors surrounding revenue is the risk that recorded revenue is overstated by managers'.J.Godfrey,et el,'Accounting Theory',7th Ed.p.315.Give three examples of ways in which revenue can be overstated and make some suggestions as to how auditors can improve their auditing techniques in this area.

Accepted Answer

Three examples of ways in which revenue

Question 7

For a cash sale,when possession of the goods passes at the time of sale,revenue will be recognised:

Accepted Answer

A) At the point of sale 
B) When the goods are delivered 
C) When the cash is received 
D) All of the above 
A) At the point of sale 
B) When the goods are delivered 
C) When the cash is received 
D) All of the above

Question 8

At present,in most cases,the firm must be a direct participant in a transaction before revenue can be recognised.

Accepted Answer

A) True 
 B)False

Question 9

In which of these cases would the criteria for recognising revenue definitely not be met?

Accepted Answer

A) A wholly executory contract 
B) A credit sale 
C) The signing of a lease 
D) The collection of instalments on a higher purchase contract. 
A) A wholly executory contract 
B) A credit sale 
C) The signing of a lease 
D) The collection of instalments on a higher purchase contract.

Question 10

Which standard provides specific guidance about revenue recognition in relation to the sale of goods and the rendering of service?

Accepted Answer

A) IAS 18/AASB 118 
B) IAS 39/AASB 139 
C) IAS 19/AASB 119 
D) None of the above 
A) IAS 18/AASB 118 
B) IAS 39/AASB 139 
C) IAS 19/AASB 119 
D) None of the above

Question 11

The IASB and the FASB's joint project on revenue recognition and measurement gives more emphasis to the substantial completion of the earning process than previous guidance and less on the change in value of assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 12

The statement regarding recognition versus realisation of revenue that is true is:

Accepted Answer

A) For an asset to be "realised' there must be an inflow of assets or a measurable change in the value of an asset 
B) 'Recognition of revenue' means an inflow of liquid assets 
C) 'Realisable' means the asset received is readily convertible to known amounts of cash 
D) All of the above are true 
A) For an asset to be "realised' there must be an inflow of assets or a measurable change in the value of an asset 
B) 'Recognition of revenue' means an inflow of liquid assets 
C) 'Realisable' means the asset received is readily convertible to known amounts of cash 
D) All of the above are true

Question 13

The main consideration to determine whether a sale has occurred is:

Accepted Answer

A) The economic substance of the transaction 
B) Whether title to the goods has passed 
C) The provisions of the legal contract 
D) Whether the sale is for goods or services 
A) The economic substance of the transaction 
B) Whether title to the goods has passed 
C) The provisions of the legal contract 
D) Whether the sale is for goods or services

Question 14

Under the IAS standards accrued revenue cannot be recorded because there is no external transaction.

Accepted Answer

A) True 
 B)False

Question 15

Which of the principles proposed by the FASB and the IASB's joint project on the recognition and measurement of revenue represent a change of emphasis from the current IASB treatment?

Accepted Answer

A) Measurement should be reliable 
B) The focus is on changes in the value of assets and liabilities 
C) The fair value approach has been adopted as a working principle 
D) B and C represent a change of emphasis from the current IASB treatment 
A) Measurement should be reliable 
B) The focus is on changes in the value of assets and liabilities 
C) The fair value approach has been adopted as a working principle 
D) B and C represent a change of emphasis from the current IASB treatment

Question 16

Explain the justification for using the percentage-of-completion method to recognise revenue for long-term construction contracts rather than the point of sale.

Accepted Answer

The percentage-of-completion method is j

Question 17

'The increase in net worth view of income (held prior to the First World War)was gradually supplanted by the notion that income had to be realised'.' J.Godfrey,et el,'Accounting Theory',7th Ed.p.299.
Explain what this statement means and why the change in view point came about.Which view of income is currently gaining the ascendancy?

Accepted Answer

The statement "The increase in net worth

Question 18

Explain why the point of sale '…is selected as being generally the most appropriate time to measure and record revenue… ' J.Godfrey,et el,'Accounting Theory',7th Ed.p.306.

Accepted Answer

The point of sale is selected as the mos

Question 19

Revenue recognition policies of US companies have been the subject of the majority of the SEC's requests for restatement of financial statements.

Accepted Answer

A) True 
 B)False

Question 20

Revenue can never be recognised before the point of sale.

Accepted Answer

A) True 
 B)False

According to Coombs and Martin when is revenue most likely to be recognised in the earning cycle?

Under the IASB Framework revenue encompasses both income and gains.

Which of these is not an accepted exception to the recorded revenue at the time of sale?

In which of these standards are gains and losses from remeasurement of assets included in either operating income or in 'comprehensive income'?

Which of these overestimates of revenue can occur within the accounting standards?

For a cash sale,when possession of the goods passes at the time of sale,revenue will be recognised:

At present,in most cases,the firm must be a direct participant in a transaction before revenue can be recognised.

In which of these cases would the criteria for recognising revenue definitely not be met?

Which standard provides specific guidance about revenue recognition in relation to the sale of goods and the rendering of service?

The IASB and the FASB's joint project on revenue recognition and measurement gives more emphasis to the substantial completion of the earning process than previous guidance and less on the change in value of assets and liabilities.

The statement regarding recognition versus realisation of revenue that is true is:

The main consideration to determine whether a sale has occurred is:

Under the IAS standards accrued revenue cannot be recorded because there is no external transaction.

Which of the principles proposed by the FASB and the IASB's joint project on the recognition and measurement of revenue represent a change of emphasis from the current IASB treatment?

Explain the justification for using the percentage-of-completion method to recognise revenue for long-term construction contracts rather than the point of sale.

Explain why the point of sale '…is selected as being generally the most appropriate time to measure and record revenue… ' J.Godfrey,et el,'Accounting Theory',7^th Ed.p.306.

Revenue recognition policies of US companies have been the subject of the majority of the SEC's requests for restatement of financial statements.

Revenue can never be recognised before the point of sale.

Introduction

Accounting Theory Construction

Role of Theory in Accounting Regulation

Theory Underpinning Accounting Standards

Measurement

Accounting Measurement Systems

Assets

Liabilities and Owners Equity

Expenses

Positive Theory of Accounting Policy and Disclosure

Capital Market Research

Behavioural Research

Emerging Issues in Accounting and Auditing

Filters

Exam 9: Revenue

According to Coombs and Martin when is revenue most likely to be recognised in the earning cycle?

Under the IASB Framework revenue encompasses both income and gains.

Which of these is not an accepted exception to the recorded revenue at the time of sale?

In which of these standards are gains and losses from remeasurement of assets included in either operating income or in 'comprehensive income'?

Which of these overestimates of revenue can occur within the accounting standards?

For a cash sale,when possession of the goods passes at the time of sale,revenue will be recognised:

At present,in most cases,the firm must be a direct participant in a transaction before revenue can be recognised.

In which of these cases would the criteria for recognising revenue definitely not be met?

Which standard provides specific guidance about revenue recognition in relation to the sale of goods and the rendering of service?

The IASB and the FASB's joint project on revenue recognition and measurement gives more emphasis to the substantial completion of the earning process than previous guidance and less on the change in value of assets and liabilities.

The statement regarding recognition versus realisation of revenue that is true is:

The main consideration to determine whether a sale has occurred is:

Under the IAS standards accrued revenue cannot be recorded because there is no external transaction.

Which of the principles proposed by the FASB and the IASB's joint project on the recognition and measurement of revenue represent a change of emphasis from the current IASB treatment?

Explain the justification for using the percentage-of-completion method to recognise revenue for long-term construction contracts rather than the point of sale.

Explain why the point of sale '…is selected as being generally the most appropriate time to measure and record revenue… ' J.Godfrey,et el,'Accounting Theory',7th Ed.p.306.

Revenue recognition policies of US companies have been the subject of the majority of the SEC's requests for restatement of financial statements.

Revenue can never be recognised before the point of sale.

Introduction

Accounting Theory Construction

Role of Theory in Accounting Regulation

Theory Underpinning Accounting Standards

Measurement

Accounting Measurement Systems

Assets

Liabilities and Owners Equity

Expenses

Positive Theory of Accounting Policy and Disclosure

Capital Market Research

Behavioural Research

Emerging Issues in Accounting and Auditing

Filters

Explain why the point of sale '…is selected as being generally the most appropriate time to measure and record revenue… ' J.Godfrey,et el,'Accounting Theory',7^th Ed.p.306.