ETH 557 FINAL EXAM | VERIFIED SOLUTION

ETH 557 FINAL EXAMETH 557 FINAL EXAM 1 In 2003, FASB and IASB met and established four criteria for establishing revenue recognition. To recognize revenue, which of the following conditions must be present? A change in assets has occurred and can be appropriately measured. Payment for the sale must be received prior to recognizing the revenue. The product or deliverable, in the case of a service business, has been received by the customer. A promise to deliver has been established. 2 Failure to provide any care in fulfilling a duty owed to another is called gross negligence constructive fraud breach of contract negligence 3 Which of the following is a fundamental characteristic of the market system? Unselfish behavior Central planning by government Government-set wages and prices Property rights 4 The income effect indicates that consumers should substitute among various products until the marginal utility from the last unit of each product purchased is the same a rise in money income will cause consumers to buy smaller quantities of normal goods when the price of a product falls, a consumer will be able to buy more of it with a specific income when the price of a product falls, the lower price will induce the consumer to buy more of that product now that it is relatively cheaper 5 The price elasticity of demand coefficient measures the slope of the demand curve how far business executives can stretch their fixed costs buyer responsiveness to price changes the extent to which a demand curve shifts as incomes change 6 A normative statement is one that applies only to microeconomics is based on the law of averages is based on value judgments applies to macroeconomics 7 Many conflicts of interest in business contracts can be remedied ethically by which of the