1.
The revenue recognition principle states that revenue is recognized when it is earned and realized or realizable.
A. True
B. False


2.
Revenue recognition only occurs at the point of sale.
A. True
B. False


3.
Trade loading and channel stuffing are used to overstate revenues and window dress the financial statements.
A. True
B. False


4.
Under the percentage-of-completion method, revenue is recognized before construction is completed.
A. True
B. False


5.
Under the installment-sales method, gross profit is recognized in the periods that cash is received, rather than in the period of sale.
A. True
B. False


6.
The completed-contract method recognizes revenues, costs, and gross profit as a company makes progress toward completion on a long-term contract.
A. True
B. False


7.
A loss on an unprofitable contract must be recognized in full in the current period under the completed-contract method.
A. True
B. False


8.
In consignment sales, the consignor uses a modified version of the sale basis of revenue recognition.
A. True
B. False


9.
Companies commonly recognize revenues from manufacturing and selling activities at point of sale (usually meaning delivery).
A. True
B. False


10.
Under the completed-contract method, a company accumulates construction costs plus gross profit earned to date in the Construction in Process inventory account.
A. True
B. False


11.
General revenue recognition principles are provided by iGAAP contain limited detailed or industry specific guidance.
A. True
B. False


12.
Which of the following transactions results in the recognition of revenue?
A.
Permitting use of an asset.
B.
Sale of non-inventoriable assets.
C.
Rendering a service.
D.
All of the above.


13.
Revenue earned from permitting others to use enterprise assets is recognized:
A.
at the point of sale.
B.
as time passes.
C.
when cash is collected.
D.
None of the above.


14.
Which method recognizes revenues and gross profit each period based upon the progress of construction?
A.
Completed-contract.
B.
Completion-of-production.
C.
Percentage-of-completion.
D.
Cost-recovery.


15.
When a loss occurs in the current period on a profitable long-term contract, the loss is:
A.
recognized under the completed-contract method.
B.
not recognized under either the completed-contract method or the percentage-of-completion method.
C.
recognized under both the completed-contract method and the percentage-of-completion method.
D.
recognized under the percentage-of-completion method.


16.
Under the completion-of-production basis, revenue is recognized if:
A.
the sales price is reasonably assured.
B.
the units produced are interchangeable.
C.
no significant costs are involved in distributing the product.
D.
All of the above.


17.
The installment-sales method is acceptable when:
A.
installment payments are being made.
B.
only a deposit has been made on the sale.
C.
there is no reasonable basis for estimating the collectibility of the sale.
D.
the amount received at the time of sale is less than the cost of the sale.


18.
Deferred gross profit on installment sales is reported on the financial statements as:
A.
a deduction from gross profit on the income statement.
B.
a current liability on the balance sheet.
C.
a long-term asset on the balance sheet.
D.
other revenue on the income statement.


19.
Repossessed merchandise on an installment sale should be recorded at:
A.
its original cost.
B.
zero.
C.
net realizable value.
D.
fair market value.


20.
Under the cost-recovery method, profit is recognized only when:
A.
cash payments received exceed the cost of goods sold.
B.
cash is received.
C.
there is a reasonable basis for estimating when full payment will be received.
D.
there are no additional costs to be incurred in recovering the total sales price.


21.
Under the deposit method:
A.
cash is received at the point of sale.
B.
cash is received after the sales transaction is completed.
C.
cash is not received until some event occurs in the future.
D.
cash is received before the sales transaction is completed.



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