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ACC 305 WEEK 3 QUIZ 2
ACC 305 Week 3 Quiz 2 – STR NEW
ACC 305 Week 3 Quiz 2
1. Companies should recognize revenue when it is realized and when cash is received.
2. Revenues are realized when a company exchanges goods and services for cash or claims to cash.
3. Delayed recognition of revenue is appropriate if the sale does not represent substantial completion of the earnings process.
4. If a company sells its product but gives the buyer the right to return it, the company should not recognize revenue until the sale is collected.
5. Companies can recognize revenue prior to completion and delivery of the product under certain circumstances.
6. Companies must use the percentage-of-completion method when estimates of progress toward completion are reasonably dependable.
7. The most popular input measure used to determine the progress toward completion is the cost-to-cost basis.
8. If the difference between the Construction in Process and theBillingson Construction in Process account balances is a debit, the difference is reported as a current asset.
9. The Construction in Process account includes only construction costs under the percentage-of-completion method.
10. Under the completed-contract method, companies recognize revenue and costs only when the contract is completed.
11. The principal advantage of the completed-contract method is that reported revenue reflects final results rather than estimates.
12. Companies must recognize a loss on an unprofitable contract under the percentage-of-completion method but not the completed-contract method.
13. A loss in the current period on a profitable contract must be recognized under both the percentage-of-completion and completed-contract method.
14. Under the completion-of-production basis, companies recognize revenue when agricul-tural crops are harvested since the sales price is reasonably assured a