Question 1

The method of reporting gross profit for long term contracts that does a better job of providing relevant information on the income statement is the ________.

Accepted Answer

A)  completed-contract-method
B)  installment sales method
C)  cost recovery method
D)  percentage-of-completion methodE) A) and B)
F) A) and C)

Question 2

When merchandise sold under the installment sale method is repossessed,a gain may be recognized.

Accepted Answer

A) True 
 B)False

Question 3

Able sells a piece of equipment to Smythe for $1,800 on August 1.The equipment cost $1,000.The equipment is picked up by Smythe on August 10.How is this transaction accounted for under a perpetual system of inventory?

Accepted Answer

A)   
B)   
C)   
D)   E) All of the above
F) None of the above

Question 4

Refer to Craft Construction.Assume that Craft uses the zero-gross-profit approach for revenue recognition.Make the appropriate journal entries for 2016 and 2017 for Craft Company.

Accepted Answer

The answer of Refer to Craft Construction.Assume that Craft uses...

Question 5

Billings in excess of costs and profits are carried on the balance sheet as a/an ________.

Accepted Answer

A)  asset
B)  liability
C)  equity
D)  revenueE) C) and D)
F) A) and B)

Question 6

A seller recognizes the right to return sales as a/an ________.

Accepted Answer

A)  liability
B)  asset
C)  revenue
D)  expenseE) B) and D)
F) B) and C)

Question 7

Construction costs and profits in excess of billings are carried on the balance sheet as a/an ________.

Accepted Answer

A)  asset
B)  liability
C)  equity
D)  revenueE) A) and B)
F) C) and D)

Question 8

Revenue received in advance is recorded as an asset on the provider's balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

The percentage-of-completion method violates the general rule for revenue recognition that the earnings process is complete.

Accepted Answer

A) True 
 B)False

Question 10

The total profit recognized on a contract using the completed-contract method is different than the total profit recognized under the percentage-of-completion method.

Accepted Answer

A) True 
 B)False

Question 11

Billings in excess of costs and profits are carried on the balance sheet as a/an ________.

Accepted Answer

A)  asset
B)  liability
C)  equity
D)  revenueE) None of the above
F) All of the above

Question 12

Transactions where a buyer accepts title and billings but delays receipt of the goods is a bill-and-hold arrangement.

Accepted Answer

A) True 
 B)False

Question 13

Refer to Craft Construction.Assume Craft uses the percentage-of-completion method for revenue recognition.Prepare all journal entries to record costs,billings,collections and profit recognition.

Accepted Answer

The answer of Refer to Craft Construction.Assume Craft uses the...

Question 14

What conditions are necessary for a company to use the percentage-of-completion method?

Accepted Answer

The percentage-of-completion method spec...

Question 15

Under GAAP,when a company uses the completed-contract method of accounting,________.

Accepted Answer

A)  estimated losses are recognized in full prior to completion of the contract
B)  estimated losses are recognized ratably based upon the degree of contract completion
C)  neither profits nor losses are recognized until the contract is completed
D)  expenses are recorded each period,but revenue is not recognized until the contract is completedE) A) and B)
F) B) and D)

Question 16

When a firm delivers merchandise to a buyer,it has met both criteria for revenue recognition.

Accepted Answer

A) True 
 B)False

Question 17

What is a consignment sale?

Accepted Answer

A consignment sale is an arrangement whe...

Question 18

Refer to Tullis Corporation.How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the completed-contract method?

Accepted Answer

A)  liability of $1,000,000
B)  asset of $1,000,000
C)  asset of $500,000
D)  liability of $500,000E) None of the above
F) A) and B)

Question 19

The percentage-of-completion method conforms to the matching principle.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following is not an indicator of a consignment arrangement?

Accepted Answer

A)  Consignor controls product until a specific event occurs.
B)  Consignor can require the goods be returned.
C)  Consignee does not have an unconditional obligation to pay.
D)  Consignor cannot require goods to be returned.E) A) and B)
F) C) and D)

Exam 9: OL: Revenue Recognition

The method of reporting gross profit for long term contracts that does a better job of providing relevant information on the income statement is the ________.

Correct AnswerverifiedShow Answer

Refer to Craft Construction.Assume Craft uses the percentage-of-completion method for revenue recognition.Prepare all journal entries to record costs,billings,collections and profit recognition.

Correct AnswerverifiedShow Answer

Billings in excess of costs and profits are carried on the balance sheet as a/an ________.

Correct AnswerverifiedShow Answer

Under GAAP,when a company uses the completed-contract method of accounting,________.

Correct AnswerverifiedShow Answer

When a firm delivers merchandise to a buyer,it has met both criteria for revenue recognition.

Correct AnswerverifiedShow Answer

A seller recognizes the right to return sales as a/an ________.

Correct AnswerverifiedShow Answer

Revenue received in advance is recorded as an asset on the provider's balance sheet.

Correct AnswerverifiedShow Answer

Refer to Craft Construction.Assume that Craft uses the zero-gross-profit approach for revenue recognition.Make the appropriate journal entries for 2016 and 2017 for Craft Company.

Correct AnswerverifiedShow Answer

What is a consignment sale?

Correct AnswerverifiedA consignment sale is an arrangement whe...View AnswerShow Answer

Construction costs and profits in excess of billings are carried on the balance sheet as a/an ________.

Correct AnswerverifiedShow Answer

The percentage-of-completion method conforms to the matching principle.

Correct AnswerverifiedShow Answer

When merchandise sold under the installment sale method is repossessed,a gain may be recognized.

Correct AnswerverifiedShow Answer

Refer to Tullis Corporation.How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the completed-contract method?

Correct AnswerverifiedShow Answer

What conditions are necessary for a company to use the percentage-of-completion method?

Correct AnswerverifiedThe percentage-of-completion method spec...View AnswerShow Answer

Billings in excess of costs and profits are carried on the balance sheet as a/an ________.

Correct AnswerverifiedShow Answer

The total profit recognized on a contract using the completed-contract method is different than the total profit recognized under the percentage-of-completion method.

Correct AnswerverifiedShow Answer

Transactions where a buyer accepts title and billings but delays receipt of the goods is a bill-and-hold arrangement.

Correct AnswerverifiedShow Answer

Which one of the following is not an indicator of a consignment arrangement?

Correct AnswerverifiedShow Answer

Able sells a piece of equipment to Smythe for $1,800 on August 1.The equipment cost $1,000.The equipment is picked up by Smythe on August 10.How is this transaction accounted for under a perpetual system of inventory?

Correct AnswerverifiedShow Answer

The percentage-of-completion method violates the general rule for revenue recognition that the earnings process is complete.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A consignment sale is an arrangement whe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The percentage-of-completion method spec...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified