ACCT 303 EXAM 1 MC QUESTIONS AND ANSWERS
$40 - CORRECT ANSWER✅✅Winchell wrote a contract that involves two performance obligations.
Product A has a standalone selling price of $50, and product B has a stand-alone selling price of $100.
The price for the combined product is $120.
How much of the transaction price would be allocated to the performance obligation for delivering
product A?
A. Is based on relative standalone selling prices - CORRECT ANSWER✅✅Allocation of the transaction
price to performance obligations...
A. Is based on relative standalone selling prices
B. Cannot be based on estimated selling prices
C. May not use the residual method when selling prices are uncertain
D. Is not allowed when bad debts are material
D. Either the most likely amount to be received or the expected value of the amount to be received -
CORRECT ANSWER✅✅Which of the following is an acceptable way to estimate uncertain
consideration?
A. Most likely amount to be received
B. The lowest amount in a range of equally likely amounts that could be received
C. Expected value of the amount to be received
D. Either the most likely amount to be received or the expected value of the amount to be received
D. All of the choices are correct - CORRECT ANSWER✅✅Which of the following is consistent with goods
and services being distinct for purposes of identifying separate performance obligations?
A. The seller regularly sells the good or service separately
B. The buyer could use the good or service separately
, C. The buyer could use the good or service in combination with goods or services the buyer could obtain
elsewhere
D. All of the choices are correct
D. The seller has significant experience with the customer and anticipates fulfillment of the contract -
CORRECT ANSWER✅✅Which of the following is not an indicator that revenue for a service can be
recognized over time?
A. The customer owns the asset as the seller is constructing it
B. The customer consumes the benefit of the sellers work as it is performed
C. The asset being constructed has no alternative use to the seller and the seller has the right to
payment for progress to date even if the customer cancels the contract
D. The seller has significant experience with the customer and anticipates fulfillment of the contract
A. A consignment arrangement - CORRECT ANSWER✅✅Marcella displays her artwork in local coffee
shops for sale. If a painting sells. Marcella remits a 10% fee to the owner of the coffee shop: if a painting
doesn't sell. Marcella takes it back to her studio. This arrangement is an example of:
A. A consignment arrangement
B. A bill and hold arrangement
C. A franchise arrangement
D. A licensing arrangement involving symbolic intellectual property
D. Licenses for functional intellectual property can be viewed as conveying a right of use - CORRECT
ANSWER✅✅Which of the following is true?
A. Licenses for functional intellectual property typically have revenue recognized over a period of time
B. Licenses for symbolic intellectual property convey a right of use and not a right of access
C. Software and media are not examples of functional intellectual property
D. Licenses for functional intellectual property can be viewed as conveying a right of use
$40 - CORRECT ANSWER✅✅Winchell wrote a contract that involves two performance obligations.
Product A has a standalone selling price of $50, and product B has a stand-alone selling price of $100.
The price for the combined product is $120.
How much of the transaction price would be allocated to the performance obligation for delivering
product A?
A. Is based on relative standalone selling prices - CORRECT ANSWER✅✅Allocation of the transaction
price to performance obligations...
A. Is based on relative standalone selling prices
B. Cannot be based on estimated selling prices
C. May not use the residual method when selling prices are uncertain
D. Is not allowed when bad debts are material
D. Either the most likely amount to be received or the expected value of the amount to be received -
CORRECT ANSWER✅✅Which of the following is an acceptable way to estimate uncertain
consideration?
A. Most likely amount to be received
B. The lowest amount in a range of equally likely amounts that could be received
C. Expected value of the amount to be received
D. Either the most likely amount to be received or the expected value of the amount to be received
D. All of the choices are correct - CORRECT ANSWER✅✅Which of the following is consistent with goods
and services being distinct for purposes of identifying separate performance obligations?
A. The seller regularly sells the good or service separately
B. The buyer could use the good or service separately
, C. The buyer could use the good or service in combination with goods or services the buyer could obtain
elsewhere
D. All of the choices are correct
D. The seller has significant experience with the customer and anticipates fulfillment of the contract -
CORRECT ANSWER✅✅Which of the following is not an indicator that revenue for a service can be
recognized over time?
A. The customer owns the asset as the seller is constructing it
B. The customer consumes the benefit of the sellers work as it is performed
C. The asset being constructed has no alternative use to the seller and the seller has the right to
payment for progress to date even if the customer cancels the contract
D. The seller has significant experience with the customer and anticipates fulfillment of the contract
A. A consignment arrangement - CORRECT ANSWER✅✅Marcella displays her artwork in local coffee
shops for sale. If a painting sells. Marcella remits a 10% fee to the owner of the coffee shop: if a painting
doesn't sell. Marcella takes it back to her studio. This arrangement is an example of:
A. A consignment arrangement
B. A bill and hold arrangement
C. A franchise arrangement
D. A licensing arrangement involving symbolic intellectual property
D. Licenses for functional intellectual property can be viewed as conveying a right of use - CORRECT
ANSWER✅✅Which of the following is true?
A. Licenses for functional intellectual property typically have revenue recognized over a period of time
B. Licenses for symbolic intellectual property convey a right of use and not a right of access
C. Software and media are not examples of functional intellectual property
D. Licenses for functional intellectual property can be viewed as conveying a right of use
