Question 1

Although revenue may be recognised at various points in the revenue generation sequence,it is normally recognised when:

Accepted Answer

A)  customers forward a firm order. 
B)  the product is delivered to customer. 
C)  the customer pays for the goods. 
D)  the warranty period expires. 
A)  customers forward a firm order. 
B)  the product is delivered to customer. 
C)  the customer pays for the goods. 
D)  the warranty period expires.

Question 2

With respect to services provided,it is customary to recognise revenue when the:

Accepted Answer

A)  customer requests the service. 
B)  supplier agrees to provide the service. 
C)  service is provided. 
D)  service is paid for. 
A)  customer requests the service. 
B)  supplier agrees to provide the service. 
C)  service is provided. 
D)  service is paid for.

Question 3

At what point would you expect revenue from sales of building materials to be recognised?

Accepted Answer

A)  During production 
B)  On completion of production 
C)  At point of sale or delivery 
D)  When cash is received 
A)  During production 
B)  On completion of production 
C)  At point of sale or delivery 
D)  When cash is received

Question 4

The income statement of Berrima Barbed Wire Ltd is:  
- If the rate of income tax were raised to 40 per cent,what would be the effect on net profit?

Accepted Answer

A)  It would increase by $700. 
B)  It would decrease by $700. 
C)  It would increase by $1000. 
D)  It would decrease by $1000. 
A)  It would increase by $700. 
B)  It would decrease by $700. 
C)  It would increase by $1000. 
D)  It would decrease by $1000.

Question 5

Multi-Storey Builders Ltd had a large three-year project with total revenue of $8 000 000 and estimated total costs of $6 500 000.The project was 20 per cent complete at the end of the first year,70 per cent complete at the end of the second year and 100 per cent complete at the end of the third year.Revenues and costs were as estimated.
- How much profit was earned during the second year if the completed contract method was used?

Accepted Answer

A)  $300 000 
B)  $750 000 
C)  $1 050 000 
D)  $0 
A)  $300 000 
B)  $750 000 
C)  $1 050 000 
D)  $0

Question 6

Highrise Constructions Ltd had a large three-year project with total revenue of $5 000 000 and estimated total costs of $4 200 000.The project was 25 per cent complete at the end of the first year,55 per cent complete at the end of the second year and 100 per cent complete at the end of the third year.Revenues and costs were as estimated.
- How much profit was earned during the third year if the completion of production method was used?

Accepted Answer

A)  $360 000 
B)  $440 000 
C)  $800 000 
D)  $400 000 
A)  $360 000 
B)  $440 000 
C)  $800 000 
D)  $400 000

Question 7

The profit for a particular project of Blue Fin Ltd,using the percentage of completion method,was $470 000 for year 1 and $690 000 for year 2 (completion).
-What difference would there be to profit for year 2 if the completion of production method were used?

Accepted Answer

A)  Profit would be $1 160 000 higher. 
B)  Profit would be $690 000 higher. 
C)  Profit would be $470 000 lower. 
D)  Profit would be $470 000 higher. 
A)  Profit would be $1 160 000 higher. 
B)  Profit would be $690 000 higher. 
C)  Profit would be $470 000 lower. 
D)  Profit would be $470 000 higher.

Question 8

At what point would you expect revenue from sales of software by a computer store to be recognised?

Accepted Answer

A)  During production 
B)  On completion of production 
C)  At point of sale or delivery 
D)  When cash is received 
A)  During production 
B)  On completion of production 
C)  At point of sale or delivery 
D)  When cash is received

Although revenue may be recognised at various points in the revenue generation sequence,it is normally recognised when:

With respect to services provided,it is customary to recognise revenue when the:

At what point would you expect revenue from sales of building materials to be recognised?

The income statement of Berrima Barbed Wire Ltd is: - If the rate of income tax were raised to 40 per cent,what would be the effect on net profit?

The profit for a particular project of Blue Fin Ltd,using the percentage of completion method,was $470 000 for year 1 and $690 000 for year 2 (completion). -What difference would there be to profit for year 2 if the completion of production method were used?

At what point would you expect revenue from sales of software by a computer store to be recognised?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 13: Revenue and Expense Recognition: Additional Concepts

Although revenue may be recognised at various points in the revenue generation sequence,it is normally recognised when:

With respect to services provided,it is customary to recognise revenue when the:

At what point would you expect revenue from sales of building materials to be recognised?

The income statement of Berrima Barbed Wire Ltd is: - If the rate of income tax were raised to 40 per cent,what would be the effect on net profit?

The profit for a particular project of Blue Fin Ltd,using the percentage of completion method,was $470 000 for year 1 and $690 000 for year 2 (completion). -What difference would there be to profit for year 2 if the completion of production method were used?

At what point would you expect revenue from sales of software by a computer store to be recognised?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters