F1 M3 MCQ's Exam Actual Questions
and Answers 2026
Which of the following statements is correct regarding deferred
revenues recorded by a company that provides services to
customers? -
correct answer ✅Deferred revenue is a liability until the
service has been performed.
How should unearned rent that has already been paid by tenants
for the next eight months of occupancy be reported in a landlord's
financial statements? -
correct answer ✅Current liability.
A contract contains multiple service-related performance
obligations. All of the following criteria below will lead to the
treatment of each service as a distinct obligation except: -
correct answer ✅The services are all similar in nature and
provided in the same manner.
A company signed a five-year contract with a customer in Year 1
and agreed to modify the contract at the beginning of Year 2.
Which of the following is a condition that must be present in order
for the contract modification to be accounted for as a separate
contract? -
correct answer ✅The scope of the original contract
increases through the addition of distinct goods or services.
, F1 M3 MCQ's Exam Actual Questions
and Answers 2026
When the total consideration for a contract with multiple
embedded obligations reflects a discount, they must appropriate
way to assign that discount is to: -
correct answer ✅Allocate it proportionally to all obligations
within the contract.
For $50 a month, Rawl Co. visits its customers' premises and
performs insect control services. If customers experience problems
between regularly scheduled visits, Rawl makes service calls at no
additional charge. Instead of paying monthly, customers may pay an
annual fee of $540 in advance. For a customer who pays the annual
fee in advance, Rawl should recognize the related revenue under
U.S. GAAP: -
correct answer ✅Evenly over the contract year as the
services are performed.
Which of the following situations would require that the seller
recognize revenue over time rather than at a point in time? -
correct answer ✅Benefits are received by the buyer as the
seller performs.
and Answers 2026
Which of the following statements is correct regarding deferred
revenues recorded by a company that provides services to
customers? -
correct answer ✅Deferred revenue is a liability until the
service has been performed.
How should unearned rent that has already been paid by tenants
for the next eight months of occupancy be reported in a landlord's
financial statements? -
correct answer ✅Current liability.
A contract contains multiple service-related performance
obligations. All of the following criteria below will lead to the
treatment of each service as a distinct obligation except: -
correct answer ✅The services are all similar in nature and
provided in the same manner.
A company signed a five-year contract with a customer in Year 1
and agreed to modify the contract at the beginning of Year 2.
Which of the following is a condition that must be present in order
for the contract modification to be accounted for as a separate
contract? -
correct answer ✅The scope of the original contract
increases through the addition of distinct goods or services.
, F1 M3 MCQ's Exam Actual Questions
and Answers 2026
When the total consideration for a contract with multiple
embedded obligations reflects a discount, they must appropriate
way to assign that discount is to: -
correct answer ✅Allocate it proportionally to all obligations
within the contract.
For $50 a month, Rawl Co. visits its customers' premises and
performs insect control services. If customers experience problems
between regularly scheduled visits, Rawl makes service calls at no
additional charge. Instead of paying monthly, customers may pay an
annual fee of $540 in advance. For a customer who pays the annual
fee in advance, Rawl should recognize the related revenue under
U.S. GAAP: -
correct answer ✅Evenly over the contract year as the
services are performed.
Which of the following situations would require that the seller
recognize revenue over time rather than at a point in time? -
correct answer ✅Benefits are received by the buyer as the
seller performs.
