136c summer04midterm

136c summer04midterm - August 23, 2004 Anderson ECON 136C...

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August 23, 2004 Anderson ECON 136C Midterm- Summer Name _________________________ Write your name, perm # and "ECON 136C Summer 2004" on your scantron and blue-books. You have the full 2 hours for the exam. You may take this exam with you once you have turned in your scantron and blue-book. ------------------------- Answer on the scantron, using number 2 pencil. 1. When the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues, revenues are a. earned. b. realized. c. recognized. d. all of these. 2. An alternative available when the seller is exposed to continued risks of ownership through return of the product is a. recording the sale, and accounting for returns as they occur in future periods. b. not recording a sale until all return privileges have expired. c. recording the sale, but reducing sales by an estimate of future returns. d. all of these. 3. A sale should NOT be recognized as revenue by the seller at the time of sale if a. payment was made by check. b. the selling price is less than the normal selling price. c. the buyer has a right to return the product and the amount of future returns cannot be reasonably estimated. d. none of these. 4. The FASB concluded that if a company sells its product but gives the buyer the right to return the product, revenue from the sales trans- action shall be recognized at the time of sale only if ALL of six conditions have been met. Which of the following is NOT one of these six conditions? a. The amount of future returns can be reasonably estimated. b. The seller's price is substantially fixed or determinable at time of sale. c. The buyer's obligation to the seller would not be changed in the event of theft or damage of the product. d. The buyer is obligated to pay the seller upon resale of the product.
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Midterm- Summer--Page 2 5. The percentage-of-completion method must be used when certain conditions exist. Which of the following is NOT one of those necessary conditions? a. Estimates of progress toward completion, revenues, and costs are reasonably dependable. b. The contractor can be expected to perform the contractual obligation. c. The buyer can be expected to satisfy some of the obligations under the contract. d. The contract clearly specifies the enforceable rights of the parties, the consideration to be exchanged, and the manner and terms of settlement. 6. In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year to the a. total costs incurred to date. b. total estimated cost. c. unbilled portion of the contract price. d. total contract price. 7. The installment-sales method of recognizing profit for accounting purposes is acceptable if a. collections in the year of sale do not exceed 30% of the total sales price.
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136c summer04midterm - August 23, 2004 Anderson ECON 136C...

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