Help with Ch. 5 Quiz - Chapter 5 Quiz Questions Help File...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 5 Quiz Questions Help File IMPORTANT: FOR TEST 2 FOR CHAPTER 5 FOCUS ON THE UPDATED CHAPTER 5 HOMEWORK FILE RATHER THAN THIS CHAPTER 5 QUIZ FILE. The Ch. 5 homework questions are short and computational. The Ch. 5 quiz questions are all conceptual. For the rest of the chapters this semester, as usual focus on the quiz study guides for the in class tests. 1. Companies recognize revenue only when A contract is reasonably likely to exist. A performance obligation is designated in a written contract. A written contract is in place and payment is variable. Control over goods or services has been transferred from the seller to the customer. 2. HINT FOR A RELATED QUESTION: For a typical manufacturing company, the most common critical point for recognizing revenue is the date when the product is delivered. Control typically passes from the manufacturer to the customer when the product is delivered 3. . Stayman Associates has sold a good to a buyer and wants to recognize revenue. Which of the following is an indicator that control of a good has passed from Stayman to the buyer? Buyer has scheduled delivery. Buyer has a strong credit history, such that bad debts are reasonably estimable. Buyer has not scheduled delivery. Buyer has assumed the risk and rewards of ownership. HINT: One of the indicators that control has passed from a seller to a buyer is if the buyer has assumed the risk and rewards of ownership. 1
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4. Which of the following is not an indicator that the customer is likely to have control over a good? Asset warehoused by seller-affiliated third party Accepted the asset Legal title to the asset Physical possession of the asset HINT: "Asset warehoused by seller-affiliated third party" is an indicator that control has not passed. 5. Consider the following three scenarios: I. ABC Lawncare performed lawn maintenance services for Drake Inc. on June 1 st , and received payment of $500 for those services. II. On June 1 st , Melly Corp. received payment for 100 pounds of raw material to be delivered to Drake Inc. in 6 months III. Lodo, LLC collected cash on June 1 st for services rendered on May 1 st . Given these scenarios, revenue can not be recognized on June 1 st for I, II I only II, III only III only HINT: Revenue can be recognized for scenario I because the seller has satisfied a performance obligation. For scenario II, the seller must wait until raw material has been delivered. For scenario III, the seller should have recognized revenue on May 1 st when the performance obligation was satisfied by rendering services. 2
Image of page 2
6. The core revenue principle states that HINT: See Illustration 5-1 below and explanation below.) Companies recognize revenue when the earnings process is virtually complete and it is probable that payments will be received.
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern