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Chapter 6 Review ACCT 3131 Flashcards | StudBud
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Chapter 6 Review ACCT 3131
Chapter 6 Review ACCT 3131
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1
Why are most long term construction contracts only a single performance obligation?
Separating the activities would be too costly
None of the above
Building activities are not distinct from the original obligation
Simplifies the revenue recognition should there be a periodic loss
2
If a firm was determining amount of income from a long-term contract, which of these would NOT be used?
Previously recognized profit
Actual cost to date
Progress billings to date
Total expected cost
3
For either a point-in-time or over time contract, what account would be debited in a journal entry to record billings?
A
C
D
B
4
Solve the following problem about revenue:
The revenue should not be recognized because it should be over time
The revenue should be recognized because there is a binding contract
The revenue should be recognized since the product shipped
The revenue should not be recognized because the seller lacks information
5
Which of these DOES qualify as a separate performance obligation?
prepayments
quality assurance warranty
right to return
material rights options
6
Solve the following problem about revenue:
Incorrect because the service revenue is a separate performance obligation
Correct because the customer believed the service was free
Incorrect because services must be done before any revenue is recognized
Correct because the product shipped and the customer paid
7
Which of these is NOT an indicator for revenue recognition over time?
Asset has no other use
Customer consumes the benefit as performed
Customer controls the asset as it is created
Customer has the title
8
What are the 2 types of intellectual property?
Private and Public
Symbolic and Useful
Symbolic and Functional
Functional and Nonfunctional
9
Which of the following IS a factor that contributes to a lack of confidence in estimating variable consideration?
Poor evidence
Long history with a customer
Controllable factors like employees
Narrow range of possible outcomes
10
Solve the following problem regarding a $12 M contract:
0
900,000
1,000,000
3,000,000
11
Which of these IS an indicator for revenue recognition at a point in time?
Customer consumes benefit as it is created
Customer maintains control over the asset as it is made
Asset has no other use
Customer is contractually obligated to pay
12
Which of the following is NOT necessary for an agreement to be a contract?
Probable collectability
Fairness for all parties
The payment terms
The rights of the parties
13
Solve the following problem about revenue:
0
1,000,000
700,000
500,000
14
A performance obligation can be ANY of these EXCEPT:
A service
All of these are performance obligations
A combination of the goods and services
A good
15
When recording a sale involving an agent, the agent records the cost of goods sold
False
True
16
Which of the following is most likely to be considered revenue, according to the FASB's definition?
A tech company recognizes gain on the sale of land
A pharmaceutical firm receives an anonymous donation to settle a liability
A streaming company fulfills a 12-month term paid by customers in advance
A clothing reseller recognizes a gain from extinguishment of long-term debt
17
Under what circumstances is functional intellectual property a right of access?
updates are expected & the customer is required to use the updated version
updates are expected and come to the customer without additional fees
updates are not necessarily required nor are customers expected to use them
updates are not expected and the customer must use an outdated version
18
Solve the following question:
$500 total, $460 to the kit, $40 to the service, $240 deferred revenue
$500 total, all to the kit, $240 in deferred revenue
$500 total, $463 to the kit and $37 to the service, no deferred revenue
$500 total, all to the kit, no deferred revenue
19
The two methods for valuing variable consideration are expected value and most likely amount.
True
False
20
Solve the following problem regarding a project priced at $6M and with a total estimated costs at inception of $4M:
300,000
600,000
1,050,000
1,000,000
21
Which of the following is NOT a method of allocating transaction price?
Cost plus
Residual
Adjusted market
Weighted average
22
Solve the following problem regarding sales:
500,000
360,000
400,000
Cannot be determined
23
Which of the following is TRUE about variable consideration?
all contracts involve variable and fixed consideration
none of these
it is dependent of future events
it does not impact transaction price
24
Which of these IS a method for determining progress to completion?
measuring the amount of effort expended in proportion to total estimated
none of these
measuring the amount of goods/services delivered
measuring amount of goods/services delivered to total amount spent
