ACC 206 Exam 2
questions and answers
2025 already graded
A+
asset-liability approach - answer recognizes and measures revenue
based on changes in assets and liabilities
Revenue Recognition Principle - answer The principle that
companies recognize revenue in the accounting period in which the
performance obligation is satisfied.
five step process for revenue recognition - answer 1. identify the
contract with customers
2. identify the separate performance obligations in the contract
3. determine the transaction price
4. allocate the transaction price to the separate performance
obligations
5. recognize revenue when each performance obligation is satisfied
Recognize revenue when - answer Performance Obligation is
Satisfied
Contract - answer Agreement between two or more parties that
creates enforceable rights or obligations.
Can be
, written,
oral, or
implied from customary business practice.
Company applies the revenue guidance to a contract according to
the following criteria: - answer The contract has commercial
substance.
The parties have approved the contract
Identification of the rights of the parties is established
Payment terms are identified
It is probable that the consideration will be collected.
Contract asset - answer rights received < performance obligation
are of two types
Unconditional rights
Conditional rights
Contract liability - answer Rights received < Performance
obligation
Transaction price - answer the amount of consideration that a
company expects to receive from a customer in exchange for
transferring goods or services
Variable Consideration - answer Price dependent on future events.
Might include discounts, rebates, credits, performance bonuses, or
royalties.
Companies estimate amount of revenue to recognize.
Expected value
Most likely amount
questions and answers
2025 already graded
A+
asset-liability approach - answer recognizes and measures revenue
based on changes in assets and liabilities
Revenue Recognition Principle - answer The principle that
companies recognize revenue in the accounting period in which the
performance obligation is satisfied.
five step process for revenue recognition - answer 1. identify the
contract with customers
2. identify the separate performance obligations in the contract
3. determine the transaction price
4. allocate the transaction price to the separate performance
obligations
5. recognize revenue when each performance obligation is satisfied
Recognize revenue when - answer Performance Obligation is
Satisfied
Contract - answer Agreement between two or more parties that
creates enforceable rights or obligations.
Can be
, written,
oral, or
implied from customary business practice.
Company applies the revenue guidance to a contract according to
the following criteria: - answer The contract has commercial
substance.
The parties have approved the contract
Identification of the rights of the parties is established
Payment terms are identified
It is probable that the consideration will be collected.
Contract asset - answer rights received < performance obligation
are of two types
Unconditional rights
Conditional rights
Contract liability - answer Rights received < Performance
obligation
Transaction price - answer the amount of consideration that a
company expects to receive from a customer in exchange for
transferring goods or services
Variable Consideration - answer Price dependent on future events.
Might include discounts, rebates, credits, performance bonuses, or
royalties.
Companies estimate amount of revenue to recognize.
Expected value
Most likely amount
