40) Which of the following is the first step in the revenue recognition process?

Question

40) Which of the following is the first step in the revenue recognition process? A) Determine the transaction price. B) Identify the contracts. C) Allocate the transaction price to the perform ance obligations. D) Identify the performance obligations. 41) When a contract fails to meet the collectibility criteria the seller should record any advance payment as a/an_ A) asset B) revenue C) liability D) expense 42) In the conceptual framework, what are the two types of qualitative characteristics of financial reporting? A) fundamental and enhancing B) point-in-time and period-of-time C) recognition and measurement D) elements and principles 3) A financing component exists in a sales contract if delivery occurs in dvance of payment or payment occurs in advance of delivery by more an ) six months ) one year )two years three years Intermediate I, Fall 2017 Final Exam

Explanation / Answer

40. Which of the following is the first step in the revenue recognition process:

B. Identify the contacts.

41. C. Liability (unearned revenue)

When a contact fails to meet the collectivity criteria, the seller should record as unearned revenue in liability side of balance sheet.

42. Qualitative characteristics of accounting reporting are

1. Point in time and period of time.

2. Recognition and measurements

43. A financing component exists in a sales contact if delivery occurs in a advance of payment or payment occurs in advance of delivery more than ONE YEAR.

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