Gliem Flashcards - Quizlet

1/15/23, 1:09 AM Gliem Flashcards | Quizlet
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Social Science Economics Finance

Ankit Rampal
Gliem
ankitrampal4@gmail.com
Ankit R
Terms in this set (25) ankitrampal10@gmail.com
Revenues of an entity The revenue is realized and earned.

are usually measured
by the exchange
values of the assets or
liabilities involved.
Recognition of revenue
does not occur until
The revenue is realized

and earned.
The revenue is
realizable.
The entity has

substantially
accomplished what it
agreed to do.
Products or services
are exchanged for
cash or claims to cash.
https://quizlet.com/130825848/gliem-flash-cards/ 1/15
The installment No reasonable basis exists for estimating the

method for degree of collectibility of receivables.
recognizing profit may
be appropriate when
The production
process is completed.
No reasonable basis
exists for estimating
the degree of
collectibility of
receivables.
Assets are salable at

reliable prices without
significant effort.
The collectibility of
receivables is assured.
According to the Estimating bad debt expense on the basis of net

FASB's conceptual credit sales.
framework, the
expense recognition
principle of associating
cause and effect is
best exemplified by
Expensing research
and development
costs.
Estimating bad debt

expense on the basis
of net credit sales.
Writing off a worthless

patent.
Depreciating a fixed
asset
During Year 1, Mitchell $120,000

Corp. started a
construction job with a
total contract price of
$600,000. The job was
completed on
December 15, Year 2.
Additional data are as
follows:
Year 1
Year 2
Actual costs incurred
$225,000
$255,000
Estimated remaining
costs
225,000
--
Billed to customer
240,000
360,000
Received from
customer
200,000
400,000
Under the completed-
contract method, what
amount should Mitchell

recognize as gross
profit for Year 2?
$45,000
$120,000
$80,000
$72,000
Robin Gavaskar, who The sale occurs.

recently founded a
company that
produces baseball bats
and balls, wants to
determine her
company's policy for
revenue recognition.
According to the
revenue recognition
principle, the most
appropriate time to
recognize revenue
would be when
Quarterly financial
statements are
prepared.
Cash is received.
Production is
completed.
The sale occurs.
A company uses the No

completed-contract
method to account for No
a long-term
construction contract.
Revenue and gross
profit are recognized
when recorded
progress billings
Are
Exceed
Collected
Recorded Costs
No
No
Yes
Yes
No
Yes
Yes
No
Under IFRS, all of the The entity has received the full consideration from
following are the sale.
conditions that must be
met for recognizing
revenue from a sale of
goods, except
The entity has received

the full consideration
from the sale.
The entity has

transferred the
significant risks and
rewards of ownership.
The amount of the

transaction can be
reliably measured.
Transaction costs can

be reliably measured.
Costs that can be Expensed in the period in which the related

reasonably associated revenue is recognized.
with specific revenues
but not with specific
products should be
Allocated to specific
products based on the
best estimate of the
production processing
time.
Capitalized and then

amortized over a
period not to exceed
60 months.
Expensed in the period

in which the related
revenue is recognized.
Charged to expense in
the period incurred.
For $50 a month, Rawl Evenly over the contract year as the services are
Co. visits its customers' performed.
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
At the end of the

contract year after all
of the services have
been performed.
When the cash is

collected.
At the end of the fiscal

year.
Evenly over the

contract year as the
services are
performed.
Gow Constructors, Inc., $600,000

has consistently used
the percentage-of-
completion method of
recognizing gross
profit. In Year 1, Gow
started work on an $18
million construction
contract that was
completed in Year 2.
The following
information was taken
from Gow's Year 1
accounting records:
Progress billings
$ 6,600,000
Costs incurred
5,400,000
Collections
4,200,000
Estimated costs to
complete
10,800,000
What amount of gross
profit should Gow have
recognized in Year 1 on
this contract?
$900,000
$1,400,000
$600,000
$1,200,000
A building contractor s progress is made toward completion of the
has a fixed-price contract.
contract to construct a
large building. It is
estimated that the
building will take 2
years to complete.
Progress billings will
be sent to the
customer at quarterly
intervals. Which of the
following describes the
preferable point for
revenue recognition
for this contract if the
outcome of the
contract can be
estimated reliably?
When the contract is

completed.
As progress is made
toward completion of
the contract.
As cash is received.
After the contract is

signed.
When would a When installment sales are material and there is

company use the no reasonable basis for estimating collectibility.
installment sales
method of revenue
recognition?
When repossessions of
merchandise sold on
the installment plan
may result in a future
gain or loss.
When collection
expenses and bad
debts on installment
accounts receivable
are deemed to be
immaterial.
When installment sales

are material and there
is no reasonable basis
for estimating
collectibility.
When collectibility of
installment accounts
receivable is
reasonably
predictable.
According to the Decision usefulness

FASB's conceptual
framework, recognition
is the process of
formally incorporating
an element into the
financial statements of
an entity. Recognition
criteria include all of
the following except
Decision usefulness.
Definitions of elements
of financial statements.
Measurability with
sufficient reliability.
Relevance.
A company provides $275,000

the following
information:
Cash Receipts from
Customers:
Year 1
Year 2
Year 3
From Year 1 sales
$95,000
$120,000
From Year 2 sales
200,000
$ 75,000
From Year 3 sales
50,000
225,000
What is the accrual-
based revenue for Year
2?
$200,000
$370,000
$320,000
$275,000
Which of the following The passage of time.

bases is the best
indication that rental
revenue should be
recognized as realized
and earned?
The collection of cash.
The signing of the

rental contract.
Production and
delivery.
The passage of time.

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1/15/23, 1:09 AM Gliem Flashcards | Quizlet

Sign in to Quizlet with Google

Social Science Economics Finance

Revenues of an entity The revenue is realized and earned.

The revenue is realized

The entity has

The installment No reasonable basis exists for estimating the

Assets are salable at

According to the Estimating bad debt expense on the basis of net

Estimating bad debt

Writing off a worthless

During Year 1, Mitchell $120,000

Actual costs incurred

amount should Mitchell

Robin Gavaskar, who The sale occurs.

The sale occurs.

A company uses the No

The entity has received

The entity has

The amount of the

Transaction costs can

Costs that can be Expensed in the period in which the related

Capitalized and then

Expensed in the period

At the end of the

When the cash is

At the end of the fiscal

Evenly over the

Gow Constructors, Inc., $600,000

When the contract is

After the contract is

When would a When installment sales are material and there is

When installment sales

According to the Decision usefulness

A company provides $275,000

From Year 2 sales

Which of the following The passage of time.

The collection of cash.

The signing of the

The passage of time.

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