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HW-1230 Accounting MCQ.
Question 1 of 20
5.0 Points
The earliest moment that the critical event and measurability are both satisfied for revenue recognition is usually:
A. before the sale.
B. after the sale.
C. at the time of sale.
D. when payment is received.
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Question 2 of 20
5.0 Points
If the critical event and measurability conditions are satisfied, revenue may be recognized before the sale:
A. as production takes place.
B. when the customer pays in advance.
C. if the seller legally owns the goods.
D. when the customer purchases on credit.
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Question 3 of 20
5.0 Points
If the critical event and measurability conditions are not satisfied, revenue may be recognized after the sale:
A. when legal ownership passes to the seller.
B. when cash is collected.
C. as the goods are shipped.
D. on the receipt of goods by the customer.
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Question 4 of 20
5.0 Points
Under the percentage-of-completion method of revenue recognition, the percentage-of-completion ratio is computed by dividing:
A. profits earned to date by estimated total profits.
B. costs incurred to date by estimated total costs.
C. costs incurred to date by the contract price.
D. profits earned to date by the contract price.
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Question 5 of 20
5.0 Points
All of the following are examples of long-term construction projects except:
A. military hardware.
B. oil tankers.
C. bridges.
D. residential swimming pools.
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Question 6 of 20
5.0 Points
When losses occur on long-term contracts using the percentage-of-completion method, they are recognized:
A. in their entirety as soon as it becomes known that a loss will be suffered.
B. at the completion of the project.
C. proportionately over the contract period using costs incurred as a base.
D. evenly over the contract period.
Question 7 of 20
5.0 Points
When losses occur on long-term contracts using the completed-contract method, they are recognized:
A. proportionately over the contract period using costs incurred as a base.
B. evenly over the contract period.
C. in their entirety as soon as it becomes known that a loss will be suffered.
D. at the completion of the project.
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Question 8 of 20
5.0 Points
Table 3-2 The Sarver Farm has completed the fall harvest with 50,000 bushels of premium wheat. The wheat cost $75,000 from plating to harvest and the market price of the wheat on the day it is placed in the silo is $2.50 per bushel. Hauppauge sells 42,000 bushels in Year 1 and holds the remaining 8,000 until Year 2 when it sells for $3.00 per bushel.
Using the completed transaction (sales) method, how much net revenue should Sarver recognize in Year 1?
A. $42,000
B. $50,000
C. $105,000
D. $125,000
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Question 9 of 20
5.0 Points
When applying the installment sales method the accounting system must match collections with the specific sales year to which the cash collections relate in order to apply the correct:
A. net profit percentage to accounts receivable.
B. gross profit percentage to accounts receivable.
C. net profit percentage to cash receipts.
D. gross profit percentage to cash receipts.
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Question 10 of 20
5.0 Points
Under the installment sales method, interest charged by the sellers is:
A. immaterial and GAAP allows it to be combined with recognized gross profit.
B. recognized out of the last cash collection of the sale.
C. recorded separately out of the periodic cash proceeds.
D. recognized out of the first cash collection of the sale.
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Question 11 of 20
5.0 Points
Under the cost recovery method of revenue recognition income is recognized:
A. on a proportionate basis as the cash is received from the sale.
B. immediately.
C. when the cash received from the sale exceeds the cost of the product sold.
D. when all of the cash has been received.
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Question 12 of 20
5.0 Points
Initial franchise fees should be recorded as revenue by the franchisor:
A. in accordance with the franchise agreement.
B. when cash is received from the franchisee.
C. when all material services relating to the sale have been substantially performed.
D. during the year the franchise agreement is signed.
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Question 13 of 20
5.0 Points
Companies that fail to meet analysts' earnings expectations:
A. are often rewarded by investors.
B. are often penalized by investors.
C. have had no consequences to the companies.
D. are forced into reorganization.
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Question 14 of 20
5.0 Points
Earnings management:
A. can be used to manipulate earnings.
B. is mandated under the SEC rules for publicly held companies.
C. is a new theory of management.
D. is rarely used .
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Question 15 of 20
5.0 Points
Academic studies have found that actual earnings:
A. fall randomly around the consensus estimate.
B. tend to come in at or above the forecast.
C. almost never seem to beat estimates by a penny or two a share, no matter what the economic conditions.
D. rarely are close to analysts' forecast earnings for the company.
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Question 16 of 20
5.0 Points
A series of immaterial errors spread across several accounts:
A. will always have a material impact on earnings.
B. must always be corrected.
C. if found by the auditors, will result in a disclaimer.
D. can, in the aggregate, have a material affect on bottom line earnings.
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Question 17 of 20
5.0 Points
The SEC specifies four criteria for revenue recognition and allows recognition of revenue when:
A. all the criteria are met.
B. 3 out of 4 criteria are met.
C. 2 out of 4 criteria are met.
D. only one criterion is met.
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Question 18 of 20
5.0 Points
In case of goods sold on layaway:
A. the seller should not recognize revenue until the products are delivered to the customer.
B. the cash received to date should be recognized as an asset until merchandise is delivered to the customer.
C. revenue should be recognized under the installment sales method.
D. the seller should recognize revenue before products are delivered to the customer.
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Question 19 of 20
5.0 Points
Revenue from nonrefundable up-front fees:
A. can never be recognized.
B. must be recognized immediately.
C. are not allowed under GAAP.
D. are usually deemed to be earned as the services are delivered over the full term of the service contract.
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Question 20 of 20
5.0 Points
Internet companies that simply act as agent or broker in a transaction must record sales based on:
A. gross basis.
B. net basis.
C. commission basis.
D. discount basis.
Answer will be sent by email as attachment.
5.0 Points
The earliest moment that the critical event and measurability are both satisfied for revenue recognition is usually:
A. before the sale.
B. after the sale.
C. at the time of sale.
D. when payment is received.
Reset Selection
Mark for Review What's This?
Question 2 of 20
5.0 Points
If the critical event and measurability conditions are satisfied, revenue may be recognized before the sale:
A. as production takes place.
B. when the customer pays in advance.
C. if the seller legally owns the goods.
D. when the customer purchases on credit.
Reset Selection
Mark for Review What's This?
Question 3 of 20
5.0 Points
If the critical event and measurability conditions are not satisfied, revenue may be recognized after the sale:
A. when legal ownership passes to the seller.
B. when cash is collected.
C. as the goods are shipped.
D. on the receipt of goods by the customer.
Reset Selection
Mark for Review What's This?
Question 4 of 20
5.0 Points
Under the percentage-of-completion method of revenue recognition, the percentage-of-completion ratio is computed by dividing:
A. profits earned to date by estimated total profits.
B. costs incurred to date by estimated total costs.
C. costs incurred to date by the contract price.
D. profits earned to date by the contract price.
Reset Selection
Mark for Review What's This?
Question 5 of 20
5.0 Points
All of the following are examples of long-term construction projects except:
A. military hardware.
B. oil tankers.
C. bridges.
D. residential swimming pools.
Reset Selection
Mark for Review What's This?
Question 6 of 20
5.0 Points
When losses occur on long-term contracts using the percentage-of-completion method, they are recognized:
A. in their entirety as soon as it becomes known that a loss will be suffered.
B. at the completion of the project.
C. proportionately over the contract period using costs incurred as a base.
D. evenly over the contract period.
Question 7 of 20
5.0 Points
When losses occur on long-term contracts using the completed-contract method, they are recognized:
A. proportionately over the contract period using costs incurred as a base.
B. evenly over the contract period.
C. in their entirety as soon as it becomes known that a loss will be suffered.
D. at the completion of the project.
Reset Selection
Mark for Review What's This?
Question 8 of 20
5.0 Points
Table 3-2 The Sarver Farm has completed the fall harvest with 50,000 bushels of premium wheat. The wheat cost $75,000 from plating to harvest and the market price of the wheat on the day it is placed in the silo is $2.50 per bushel. Hauppauge sells 42,000 bushels in Year 1 and holds the remaining 8,000 until Year 2 when it sells for $3.00 per bushel.
Using the completed transaction (sales) method, how much net revenue should Sarver recognize in Year 1?
A. $42,000
B. $50,000
C. $105,000
D. $125,000
Reset Selection
Mark for Review What's This?
Question 9 of 20
5.0 Points
When applying the installment sales method the accounting system must match collections with the specific sales year to which the cash collections relate in order to apply the correct:
A. net profit percentage to accounts receivable.
B. gross profit percentage to accounts receivable.
C. net profit percentage to cash receipts.
D. gross profit percentage to cash receipts.
Reset Selection
Mark for Review What's This?
Question 10 of 20
5.0 Points
Under the installment sales method, interest charged by the sellers is:
A. immaterial and GAAP allows it to be combined with recognized gross profit.
B. recognized out of the last cash collection of the sale.
C. recorded separately out of the periodic cash proceeds.
D. recognized out of the first cash collection of the sale.
Reset Selection
Mark for Review What's This?
Question 11 of 20
5.0 Points
Under the cost recovery method of revenue recognition income is recognized:
A. on a proportionate basis as the cash is received from the sale.
B. immediately.
C. when the cash received from the sale exceeds the cost of the product sold.
D. when all of the cash has been received.
Reset Selection
Mark for Review What's This?
Question 12 of 20
5.0 Points
Initial franchise fees should be recorded as revenue by the franchisor:
A. in accordance with the franchise agreement.
B. when cash is received from the franchisee.
C. when all material services relating to the sale have been substantially performed.
D. during the year the franchise agreement is signed.
Reset Selection
Mark for Review What's This?
Question 13 of 20
5.0 Points
Companies that fail to meet analysts' earnings expectations:
A. are often rewarded by investors.
B. are often penalized by investors.
C. have had no consequences to the companies.
D. are forced into reorganization.
Reset Selection
Mark for Review What's This?
Question 14 of 20
5.0 Points
Earnings management:
A. can be used to manipulate earnings.
B. is mandated under the SEC rules for publicly held companies.
C. is a new theory of management.
D. is rarely used .
Reset Selection
Mark for Review What's This?
Question 15 of 20
5.0 Points
Academic studies have found that actual earnings:
A. fall randomly around the consensus estimate.
B. tend to come in at or above the forecast.
C. almost never seem to beat estimates by a penny or two a share, no matter what the economic conditions.
D. rarely are close to analysts' forecast earnings for the company.
Reset Selection
Mark for Review What's This?
Question 16 of 20
5.0 Points
A series of immaterial errors spread across several accounts:
A. will always have a material impact on earnings.
B. must always be corrected.
C. if found by the auditors, will result in a disclaimer.
D. can, in the aggregate, have a material affect on bottom line earnings.
Reset Selection
Mark for Review What's This?
Question 17 of 20
5.0 Points
The SEC specifies four criteria for revenue recognition and allows recognition of revenue when:
A. all the criteria are met.
B. 3 out of 4 criteria are met.
C. 2 out of 4 criteria are met.
D. only one criterion is met.
Reset Selection
Mark for Review What's This?
Question 18 of 20
5.0 Points
In case of goods sold on layaway:
A. the seller should not recognize revenue until the products are delivered to the customer.
B. the cash received to date should be recognized as an asset until merchandise is delivered to the customer.
C. revenue should be recognized under the installment sales method.
D. the seller should recognize revenue before products are delivered to the customer.
Reset Selection
Mark for Review What's This?
Question 19 of 20
5.0 Points
Revenue from nonrefundable up-front fees:
A. can never be recognized.
B. must be recognized immediately.
C. are not allowed under GAAP.
D. are usually deemed to be earned as the services are delivered over the full term of the service contract.
Reset Selection
Mark for Review What's This?
Question 20 of 20
5.0 Points
Internet companies that simply act as agent or broker in a transaction must record sales based on:
A. gross basis.
B. net basis.
C. commission basis.
D. discount basis.
Answer will be sent by email as attachment.
