Test Bank Chapter 18 Revenue Recognition.

Test Bank Chapter 18 Revenue Recognition. CHAPTER 18 REVENUE RECOGNITION IFRS questions are available at the end of this chapter. TRUE-FALSE—Conceptual Description ...

Test Bank Chapter 18 Revenue Recognition. 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 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 Description c 21. Revenue recognition principle. b 22. Definition of "realized." a 23. Definition of "earned." b S24. Revenue recognition representations. d P25. Definition of recognition. b P26. 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. d S38. Percentage-of-completion input measures. MULTIPLE CHOICE—Conceptual (cont.) Description a S39. 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. d S45. Revenue recognition of completion of production. b S46. 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. c S51. Income realization on installment sales. d P52. 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 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. MULTIPLE CHOICE—Computational (cont.) 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 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. 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. SUMMARY OF LEARNING OBJECTIVES BY QUESTIONS Item Type Item Type Item Type Item Type Item Type Item Type Item Type Learning Objective 1 1. TF 3. TF 22. MC S24. MC P26. MC 121. E 2. TF 21. MC 23. MC P25. MC 110. MC 122. E Learning Objective 2 4. TF 6. TF 28. MC 30. MC 5. TF 27. MC 29. MC 122. E Learning Objective 3 7. TF 34. MC 66. MC 72. MC 80. MC 123. E 133. P 8. TF 35. MC 67. MC 73. MC 82. MC 124. E 9. TF 36. MC 68. MC 74. MC 83. MC 125. E 31. MC 37. MC 69. MC 75. MC 84. MC 126. E 32. MC S38. MC 70. MC 76. MC 111. MC 127. E 33. MC 65. MC 71. MC 78. MC 112. MC 132. P Learning Objective 4 10. TF 40. MC