Intermediate Accounting Test 2 with 100% Correct Answers| Latest 2024 Graded A+

According to the FASB's conceptual framework, recognition is the process of formally incorporating an element into the financial statements of an entity. Recognition criteria include all of the following except: A. Measurability with sufficient reliability B. Definitions of elements of financial statements C. Decision usefulness D. Relevance - C According to the FASB conceptual framework, which of the following statements conforms to the realization concept? A. Equipment depreciation was assigned to a production department and then to product unit costs. B. Depreciated equipment was sold in exchange for a note receivable. C. Cash was collected on accounts receivable D. Product unit costs were assigned to cost of goods sold when the units were sold. - B (The term "realization" is used most precisely in accounting and financial reporting with regard to sales of assets for cash or claims to cash. The terms "realized" and "unrealized" identify revenues or gains and losses on assets sold and unsold, respectively. Thus, the sale of depreciated equipment results in realization.)Revenues of an entity are usually measured by the exchange values of the assets or liabilities involved. Recognition of revenue does not occur until: A. The revenue is realizable B. The revenue is realized and earned C. Products or services are exchanged for cash or claims to cash D. The entity has substantially accomplished what it has agreed to do - B (Revenues are realized when products, merchandise, or other assets are exchanged for cash or claims to cash. Revenues are realizable when related assets received or held are readily convertible to known amounts of cash or claims to cash. Revenues are earned when the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues.)