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Chapter 6 - Revenue Recognition Issues

This document contains a multiple choice quiz on revenue recognition issues from Chapter 6 with 10 questions. The student scored 0% on the quiz with 0 out of 10 points. The questions cover topics like conditions for revenue recognition, accounting for sales with future obligations, estimating transaction outcomes, accounting for permanent differences, and government grants.

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241 views3 pages

Chapter 6 - Revenue Recognition Issues

This document contains a multiple choice quiz on revenue recognition issues from Chapter 6 with 10 questions. The student scored 0% on the quiz with 0 out of 10 points. The questions cover topics like conditions for revenue recognition, accounting for sales with future obligations, estimating transaction outcomes, accounting for permanent differences, and government grants.

Uploaded by

sablu khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Name:

Score:0/10points(0%)

Chapter6Revenuerecognitionissues
MultipleChoice
Identifythechoicethatbestcompletesthestatementoranswersthequestion.

1.Whichofthefollowingconditionsisnotrequiredtobesatisfiedtorecognizerevenue
fromthesaleofgoods?
a. Theenterprisehastransferredtothebuyerthesignificantrisksandrewardsof
ownershipofthegoods.
b. Theenterpriseretainsneithercontinuingmanagerialinvolvementtothedegree
usuallyassociatedwithownership,noreffectivecontroloverthegoodssold.
c. Thecashcorrespondingtothesaleofgoodshasbeencollected.
d. Theamountofrevenuecanbemeasuredreliably.
ANSWER:C
Moderate
POINTS: 0/1
REF:
page194

2.Asaleoncreditof100CUtakesplacethatcarriesa100%chancethatthesellerwill
needtoprovideadditionalcostsof10CUtwoyearsfromthedateofthesale.Whatis
recordedinthebalancesheetatthetimeofthesale?
a.
b.

c.
d.

ANSWER:C
Moderate
POINTS: 0/1
REF:
page195

3.Whichofthefollowingconditionsdoesnotneedtobesatisfiedinordertoreliably
estimatetheoutcomeofatransaction?
a. Theamountofrevenuethatwillbeobtaineduponcompletioncanbemeasured
reliably.
b. Thecashcorrespondingtothetransactionhasbeencollected.

c. Thestageorpercentageofcompletionofthetransactiononthebalancesheet
datecanbemeasuredreliably.
d. Thecostsincurredforthetransactionandthecoststocompletethetransaction
canbemeasuredreliably.
ANSWER:B
Moderate
POINTS: 0/1
REF:
page196

4.Whentheoutcomeofatransactioncannotbeestimatedreliably,anditisnotprobable
thatthecostsincurredwillberecovered,revenueshouldnotberecognized,andthe
costsincurredshouldberecognizedimmediatelyasanexpense.Whichaccounting
principleisputintopracticeinthiscase?
a. Matchingprinciple
b. Goingconcernprinciple
c. Principleofprudence
d. Accrualprinciple
ANSWER:C
Moderate
POINTS: 0/1
REF:
page197

5.Dividendsshouldberecognizedwhentheshareholdersrighttoreceivepaymentis
established.Thistakesplace:
a. Whenthebooksareclosed.
b. Whenthebusinessisliquidated.
c. Whentheboardofdirectorsdecidetodistributedividends.
d. Whenthedecisiontodistributedividendsismadeintheshareholdersgeneral
meeting.
ANSWER:D
Moderate
POINTS: 0/1
REF:
page197

6.Whichofthefollowingstatementsisfalse?
a. Permanentdifferencesdonotreversethemselvesovertime.
b. Incaseofpermanentdifferences,theaccountingandtaxapproachesgivethe
sameaftertaxincome.
c. Permanentdifferenceshavenofuturetaxconsequences.
d. Permanentdifferencesarelinkedtothedifferencesinthetimingofrevenueand
expenserecognitionbetweenaccountingandtaxrules.
ANSWER:D
Moderate
POINTS: 0/1
REF:
page202

7.Insomecountries,alatentgainonmarketablesecuritiesistaxableintheperiod
incurred,butisreportedunderfinancialaccountingonlyatthetimeofthesale.What
willbegeneratedbythistemporarydifference?
a. Deferredtaxliability
b. Deferredtaxrevenue

c. Deferredtaxasset
d. Deferredtaxexpense
ANSWER:C
Moderate
POINTS: 0/1
REF:
page206

8.Taxespayableaccountingconsistsinignoringatemporarydifferenceitrecognizes
incometaxexpenseinthefinancialstatementsforshareholdersasidenticaltothe
incometaxpayable.Thereisnolinkbetweenthetaxrecognizedandthetriggeringevent
andthusthisprincipleisinoppositiontothe______
a. Principleofprudence.
b. Accrualprinciple.
c. Goingconcernprinciple.
d. Matchingprinciple.
ANSWER:D
Easy
POINTS: 0/1
REF:
page209

9.Thecompletedcontractmethodandthepercentageofcompletionmethodareboth
usedfortherecognitionofincomepertainingtoalongtermcontract.Whendothese
methodsimplythatpotentiallossesonacontractarerecognized?
a. Whentheyincurred
b. Attheendofthecontract
c. Assoonastheycanbelegitimatelyestablished
d. Noneoftheabove
ANSWER:C
Moderate
POINTS: 0/1
REF:
page212

10.WhichofthefollowingcategoriesofgovernmentassistanceisnotspecifiedbyIAS20?
a. Contingentloans
b. Forgivableloans
c. Grantsrelatedtoincome
d. Grantsrelatedtoassets
ANSWER:A
Moderate
POINTS: 0/1
REF:
page221

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