In accounting for revenue recognition under ASC Topic 606, revenue can be recogn

Question

In accounting for revenue recognition under ASC Topic 606, revenue can be recognized before a contract exists when cash has been received and:

Multiple Choice

Goods have already been delivered to a customer, and there is no further obligation for the seller to deliver goods or services.

The cash has been received for goods identified to be delivered and the cash is refundable.

The cash has been received for goods or services to be delivered and the cash is nonrefundable.

Revenue should never be recognized before a contract exists.

Explanation / Answer

Option A Goods have already been delivered to a customer, and there is no further obligation for the seller to deliver goods or services. explantion The revenue can be recognized if the party to the contract satisfies a performance obligation. A performance obligation is completed when the goods and services have been transferred to the other party.

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