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Test Bank Chapter 18 Revenue Recognition.

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Test Bank Chapter 18 Revenue Recognition.

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CHAPTER 18 REVENUE RECOGNITION IFRS questions are available at the end of this chapter. TRUE-FALSE—Conceptual Description F 1. Recognition of revenue. T 2. Realization of revenue. T 3. Delayed recognition of revenue. F 4. Recognizing revenue when right of return exists. T 5. Recognizing ...

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test bank chapter 18 revenue recognition

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Test Bank Chapter 18 Revenue Recognition.

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CHAPTER 18
REVENUE RECOGNITION
IFRS questions are available at the end of this chapter.

TRUE-FALSE—Conceptual
Answer No. Description
F 1. Recognition of revenue.
T 2. Realization of revenue.
T 3. Delayed recognition of revenue.
F 4. Recognizing revenue when right of return exists.
T 5. Recognizing revenue prior to product completion.
F 6. Use of percentage-of-completion method.
T 7. Input measure for contract progress.
T 8. Reporting Construction in Process and Billings on Construction in Process.
F 9. Construction in Process account balance.
F 10. Recognition of revenue under completed-contract method.
T 11. Principal advantage of completed-contract method.
F 12. Recognizing loss on an unprofitable contract.
F 13. Recognizing current period loss on a profitable contract.
T 14. Recognizing revenue under completion-of-production basis.
F 15. Recording a loss on an unprofitable contract.
F 16. Deferring revenue under installment-sales method.
T 17. Deferring gross profit under installment-sales method.
T 18. Classification of deferred gross profit.
F 19. Recognizing revenue under cost-recovery method.
T 20. Recognizing profit under cost-recovery method.

MULTIPLE CHOICE—Conceptual
Answer No. Description
c 21. Revenue recognition principle.
b 22. Definition of "realized."
a 23. Definition of "earned."
S
b 24. Revenue recognition representations.
P
d 25. Definition of recognition.
P
b 26. Revenue recognition principle.
d 27. Recognizing revenue at point of sale.
d 28. Recording sales when right of return exists.
c 29. Revenue recognition when right of return exists.
d 30. Revenue recognition when right of return exists.
b 31. Appropriate accounting method for long-term contracts.
c 32. Percentage-of-completion method.
b 33. Percentage-of-completion method.
c 34. Classification of progress billings and construction in process.
b 35. Calculation of gross profit using percentage-of-completion.
a 36. Disclosure of earned but unbilled revenues.
b 37. Disadvantage of using percentage-of-completion.
S
d 38. Percentage-of-completion input measures.

,18 - 2 Test Bank for Intermediate Accounting, Fourteenth Edition

MULTIPLE CHOICE—Conceptual (cont.)
Answer No. Description
S
a 39. Advantage of completed-contract method
c 40. Revenue, cost, and gross profit under the completed-contract method.
a 41. Loss recognition on a long-term contract.
c 42. Accounting for long-term contract losses.
d 43. Criteria for revenue recognition of completion of production.
a 44. Completion-of-production basis.
S
d 45. Revenue recognition of completion of production.
S
b 46. Treatment of estimated contract cost increase.
c 47. Presentation of deferred gross profit.
c 48. Appropriate use of the installment-sales method.
b 49. Valuing repossessed assets.
b 50. Gross profit deferred under the installment-sales method.
S
c 51. Income realization on installment sales.
P
d 52. Conservative revenue recognition method.
b 53. Income recognition under the cost-recovery method.
b 54. Income recognition under the cost-recovery method.
d 55. Cost recovery basis of revenue recognition.
b 56. Deposit method of revenue recognition.
d 57. Cost recovery method.
b *58. Types of franchising arrangements.
d *59. Accounting for consignment sales.
d *60. Allocation of initial franchise fee.
a *61. Recognition of continuing franchise fees.
b *62. Future bargain purchase option.
a *63. Option to purchase franchisee's business agreement.
d *64. Revenue recognition by the consignor.
P
These questions also appear in the Problem-Solving Survival Guide.
S
These questions also appear in the Study Guide.
*This topic is dealt with in an Appendix to the chapter.

MULTIPLE CHOICE—Computational
Answer No. Description
c 65. Computation of total revenue and accounts receivable.
d 66. Computation of total construction expenses.
b 67. Computation of costs and profits in excess of billings balance.
c 68. Computation of total revenue and construction expenses.
b 69. Gross profit recognized under percentage-of-completion.
c 70. Computation of construction in process amount.
c 71. Percentage-of-completion method.
c 72. Percentage-of-completion method.
b 73. Determine cash collected on long-term construction contract.
d 74. Determine gross profit using percentage-of-completion.
c 75. Gross profit to be recognized using percentage-of-completion.
b 76. Gross profit to be recognized using percentage-of-completion.
c 77. Profit to be recognized using completed-contract method.
a 78. Gross profit to be recognized using percentage-of-completion.

, Revenue Recognition 18 - 3

MULTIPLE CHOICE—Computational (cont.)
Answer No. Description
b 79. Profit to be recognized using completed-contract method.
a 80. Gross profit to be recognized using percentage-of-completion.
c 81. Gross profit to be recognized using completed-contract method.
b 82. Computation of construction costs incurred.
c 83. Gross profit recognized under percentage-of-completion.
a 84. Computation of construction in process amount.
b 85. Loss recognized using completed-contract method.
c 86. Revenue recognition using completed-contract method.
c 87. Reporting a current liability with completed-contract-method.
a 88. Reporting inventory under completed-contract method.
d 89. Gain recognized on repossession—installment sale.
b 90. Calculate loss on repossessed merchandise.
a 91. Calculate loss on repossessed merchandise.
b 92. Interest recognized on installment sales.
b 93. Calculation of deferred gross profit amount.
b 94. Computation of realized gross profit amount.
d 95. Computation of loss on repossession.
d 96. Calculation of gross profit rate.
a 97. Computation of net income from installment sales.
d 98. Computation of realized and deferred gross profit.
a 99. Calculation of gross profit rate.
d 100. Computation of net income from installment sales.
a 101. Computation of realized and deferred gross profit.
c 102. Computation of realized gross profit amount.
b 103. Computation of realized gross profit-cost recovery method.
a 104. Revenue recognized under the cost-recovery method.
d *105. Cancellation of franchise agreement.
c *106. Accounting for initial and annual continuing franchise fees.
b *107. Franchise fee with a bargain purchase option.
d *108. Sales on consignment.
a *109. Reporting inventory on consignment.

MULTIPLE CHOICE—CPA Adapted
Answer No. Description
a 110. FASB's definition of "recognition."
b 111. Determine contract costs incurred during year.
d 112. Gross profit to be recognized using percentage-of-completion.
d 113. Profit to be recognized using completed-contract method.
c 114. Revenue recognized under completed-production method.
b 115. Determine balance of installment accounts receivable.
c 116. Calculate deferred gross profit—installment sales.
c 117. Calculate deferred gross profit—installment sales.
c 118. Balance of deferred gross profit—installment sales.
c 119. Reporting deferred gross profit—installment sales.
a 120. Effect of collections received on service contracts.

, 18 - 4 Test Bank for Intermediate Accounting, Fourteenth Edition

EXERCISES
Item Description
E18-121 Revenue recognition (essay).
E18-122 Revenue recognition (essay).
E18-123 Long-term contracts (essay).
E18-124 Journal entries—percentage-of-completion.
E18-125 Percentage-of-completion method.
E18-126 Percentage-of-completion method.
E18-127 Percentage-of-completion and completed-contract methods.
E18-128 Installment sales.
E18-129 Installment sales.
E18-130 Installment sales.
*E18-131 Franchises.
PROBLEMS
Item Description
P18-132 Long-term construction project accounting.
P18-133 Accounting for long-term construction contracts.
P18-134 Long-term contract accounting—completed-contract.
P18-135 Installment sales.

CHAPTER LEARNING OBJECTIVES

1. Apply the revenue recognition principle.

2. Describe accounting issues for revenue recognition at point of sale.

3. Apply the percentage-of-completion method for long-term contracts.

4. Apply the completed-contract method for long-term contracts.

5. Identify the proper accounting for losses on long-term contracts.

6. Describe the installment-sales method of accounting.

7. Explain the cost-recovery method of accounting.

*8. Explain revenue recognition for franchises and consignment sales.

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