ACCT 201 Pre-Quiz Number 3 - Copy

ACCT 201 Pre-Quiz Number 3 - Copy - ACCT 201 Pre-Quiz #3...

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ACCT 201 Pre-Quiz #3 (Ch. 5 and 6) - Professor Farina Student: ___________________________________________________________________________ CHAPTER FIVE True / False Questions: Circle True or False. 1. Revenue is not recognized under the realization principle unless the earnings process is complete or virtually complete and there is reasonable certainty about collectability of the asset received. True False 2. Use of the installment sales method indicates little uncertainty about collection of the receivable. True False 3. Over the life of a particular account receivable, the same total amount of gross profit is recognized under the installment method and the cost recovery method. True False 4. When the right of return exists, revenue can be recognized at the point of sale if the seller can make reliable estimates of future returns. True False 5. Under the percentage-of-completion method, amounts billed and the cash actually received affect income recognition. True False 6. Under the percentage-of-completion method, the percent complete is often estimated by comparing the cost incurred to date with the total estimated cost to complete. True False 7. Under the completed contract method, gross profit or loss is never recognized until the contract is completed. True False 8. Under the cost recovery method used to account for long-term contracts under IFRS, equal amounts of revenue and cost are recognized until all costs are recovered. True False 9. Recognition of franchise fee revenue is dependent on judgments of both substantial performance and fee collectability. True False 10. Initial franchise fees are always recognized on the date they are received. True False 1
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11. A decrease in the receivables turnover ratio indicates a decrease in the time between credit sales and cash collection. True False Multiple Choice Questions: Circle the letter of the best answer. 12. Merchandise sold FOB destination indicates that: A. The seller holds title until the merchandise is received at the buyer's location. B. The buyer is responsible for delivery of the merchandise to the destination. C. The full order is back ordered to its destination. D. The buyer pays the freight to the destination. 13. Which of the following was not a criterion for revenue recognition in SAB 101? A. Cash has been collected. B. Collectability is reasonably assured. C. Persuasive evidence of an arrangement exists.
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This note was uploaded on 02/20/2012 for the course ECON 222 taught by Professor Enclair during the Spring '12 term at Guilford Tech.

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ACCT 201 Pre-Quiz Number 3 - Copy - ACCT 201 Pre-Quiz #3...

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