Bouchard512 - Multiple Choice (2 points each) 1. The...

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Unformatted text preview: Multiple Choice (2 points each) 1. The revenue recognition principle provides that revenue is recognized when a. it is realized. b. it is realizable. c. it is realized or realizable and it is earned. d. none of these. 2. 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. 3. The Nathan Company is involved in the construction of an asset under a long-term construction contract. At the end of the third year of the five-year contract, the cost estimates indicate that a loss will result on the completion of the entire contract. In accounting for this contract, the entire expected loss must be recognized in the current period under the Percentage-of- Completed- Completion Method Contract Method a. Yes No b. Yes Yes c. No Yes d. No No 4. A sale should not be recognized as revenue by the seller at the time of sale if a. 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. 5. Ramos, Inc. began work in 2008 on contract #3814, which provided for a contract price of $7,200,000. Other details follow: 2008 2009 Costs incurred during the year $1,200,000 $3,675,000 Estimated costs to complete, as of December 31 3,600,000 Billings during the year 1,350,000 5,400,000 Collections during the year 900,000 5,850,000 Assume that Ramos uses the percentage-of-completion method of accounting. The portion of the total gross profit to be recognized as income in 2008 is a. $450,000. b. $600,000. c. $1,800,000. d. $2,400,000. 6. Assume that Ramos uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2009 is a. $900,000. b. $1,350,000. c. $2,325,000. d. $7,200,000. 7. Which of the following is not considered cash for financial reporting purposes? a. Petty cash funds and change funds b. Money orders, certified checks, and personal checks c. Coin, currency, and available funds d. Postdated checks and I.O.U.'s 8. Bank overdrafts, if material, should be a. reported as a deduction from the current asset section. b. reported as a deduction from cash....
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Bouchard512 - Multiple Choice (2 points each) 1. The...

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