Intermediate Accounting Final Exam Review Questions With 100% Correct Answers

Intermediate Accounting Final Exam Review Questions With 100% Correct Answers To address inconsistencies and weaknesses in revenue recognition, a comprehensive revenue recognition standard was developed entitled the A. Revenue from Contracts with Customers B. Principle-based Revenue Accounting C. Revenue Recognition Principle D. Rules-based Revenue Accounting - answerA. Revenue from contracts with customers The first step in the process for revenue recognition is to A. allocate transaction price to the separate performance obligations B. determine the transaction price C. identify the separate performance obligations in the contract D. identify the contract with customers - answerD. Identify the contract with customers The third step in the process for revenue recognition is to A. identify the separate performance obligations in the contract B. recognize revenue when each performance obligation is satisfied C. allocate transaction price to the separate performance obligations D. determine the transaction price - answerD. Determine the transaction price A contract A. is an agreement that creates enforceable rights and obligations B. is enforceable if each party can unilaterally terminate the contract C. does not need to have commercial substance D. must be in writing to be an enforceable contract - answerA. Is an agreement that creates enforceable rights and obligations On January 15, 2018, Bella Vista Company enters into a contract to build custom equipment for ABC Carpet Company. The contract specified a delivery date of March 1. The equipment was not delivered until March 31. The contract required full payment of $75,000 30 days after delivery. The revenue for this contract should be A. recorded on March 1, 2018 B. recorded on April 30, 2018 C. recorded on January 15, 2018 D. recorded on March 31, 2018 - answerD. recorded on March 31, 2018 A performance obligation exists when A. a contract is approved and signed B. a company provides interdependent product or service C. a company receives the right to receive consideration D. a company provides a distinct product or service - answerD. A company provides a distinct product or service New Age Computers manufactures and sells pagers and radio paging systems which include a 180 day warranty on product defects. It also sells an extended warranty which provides an additional two years of protection. On May 10, it sold a paging system for $4,500 and an extended warranty for another $1,400. The journal entry to record this transaction would include A. a credit to Unearned Warranty Revenue of $1,400 B. a credit to Warranty Revenue of $5,900 C. a credit to Warranty Revenue of $1,400 D. a credit to Sales of $4,500 and a credit to Warranty Revenue of $1,400 - answerA. A credit to unearned warranty revenue of $1,400 A transaction price for multiple performance obligations should be allocated A. based on what the company could sell the goods for on a standalone basis B. based on total transaction price less residual value C. based on forecasted cost of satisfying performance obligation D. based on selling price from the company's competitors - answerA. Based on what the company could sell the goods for ob a standalone basis A company has satisfied its performance obligation when the A. company has legal title to the asset B. company has transferred physical possession of the asset C. company has significant risks and rewards of ownership D. company has received payment for goods or services - answerB. Company has transferred physical possession of the asset If a contract involves a significant financing component, A. interest must be accrued on the current sales price of goods or services B. the time value of money is used to determine the fair value of the transaction C. the transaction amount should be based on the current sales price of goods or services D. the time value of money is not required to determine transaction price, if the payment is scheduled to occur in more than a year - answerB. The time value of money used to determine the fair value of the transaction When a company has an obligation or right to repurchase an asset for an amount greater than or equal to its selling price, the transaction should be treated as a A. financing transaction B. put option C. outright sale D. repurchase transaction - answerA. Financing transaction The role of the agent in a Principal-Agent relationship is to A. arrange for the principal to provide goods or services to a customer B. develop and maintain goodwill of the principal's customers C. market the principal goods and services to prospective customers D. provide the goods or services for a customer - answerA. Arrange for the principal to provide goods or services to a customer The use of the net method of recognizing revenue by an agent A. is appropriate as long as both revenue and costs are included B. could result in an understatement of the agent's revenue C. is the correct method in a principal-agent relationship D. could result in an overstatement of the agent's revenue - answerC. Is he correct method in a principal-agent relationship Consigned goods are recognized as rev