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CHAPTER 18 – REVENUE RECOGNITION Test Bank
TRUE-FALSE—Conceptual
Answer No. Description
F 1. Revenue recognition standard.
T 2. Recognition of revenue.
F 3. First step in revenue recognition process.
T 4. Recognizing revenue from a contract.
T 5. Recognizing revenue with a contract modification.
T 6. Accounting for performance obligation.
F 7. Definition of performance obligation.
F 8. Use of expected value to estimate variable consideration.
T 9. Sales transaction involving significant financing components.
F 10. Allocating the transaction price.
T 11. Sale of bundled goods at a discount.
T 12. Recognizing revenue from a performance obligation.
F 13. Satisfying performance obligations.
F 14. Recognizing revenue when right of return exists.
T 15. Definition of assurance-type warranties.
T 16. Definition of a contract liability.
T *17. Input measure for contract progress.
T *18. Reporting Construction in Process and Billings on Construction in
Process.
F *19. Construction in Process account balance.
F *20. Recognition of revenue under completed-contract method.
T *21. Principal advantage of completed-contract method.
F *22. Recognizing loss on an unprofitable contract.
F *23. Recognizing current period loss on a profitable contract.
T *24. Billings and construction in process balance vs. contract price.
F *25. Recording a loss on an unprofitable contract.
MULTIPLE CHOICE—Conceptual
Answer No. Description
d 26. Comprehensive revenue recognition model.
c 27. Revenue recognition standard.
b 28. First step in revenue recognition process.
d 29. Revenue recognition process steps.
a 30. Revenue recognition process steps.
c 31. Revenue recognition process steps.
b 32. Last step in revenue recognition process.
b 33. Definition of a contract.
d 34. Recognizing revenue from a contract.
a 35. Recording the signing of a contract.
c 36. Timing of contract recording.
d 37. Accounting for contract modification as a new contract.
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MULTIPLE CHOICE—Conceptual (cont.)
Answer No. Description
b 38. Product pricing with contract modification-No separate performance
obligation.
c 39. Performance obligation identification.
a 40. Accounting for multiple performance obligation.
d 41. Recording an extended warranty.
a 42. Recording transaction with multiple performance obligations.
b 43. Transaction price definition.
d 44. Use of expected value to estimate variable consideration.
a 45. Contract with significant financing component.
c 46. Valuing noncash consideration.
c 47. Consideration paid to customers.
b 48. Transaction price allocation.
a 49. Bundle price discount allocation.
d 50. Satisfying performance obligation.
b 51. Input measure for determining completion progress.
a 52. Cost-to-cost basis.
c 53. Sales with a right of return.
b 54. Accounting for an obligation to purchase an asset.
d 55. Bill-and-hold arrangement.
a 56. Agent role in principal-agent relationship.
b 57. Net method of recognizing revenue.
d 58. Accounting for consignments.
d 59. Recognizing revenue from consigned goods.
c 60. Recording an option to purchase a warranty.
d 61. Accounting for nonrefundable upfront fees.
d 62. Accounting for an extended warranty.
a 63. Reporting rights to receive consideration.
c 64. Reporting partial satisfaction of a multiple performance obligation.
b 65. Example of a contract liability.
d 66. Recording a contract for products.
c 67. Disclosure related to revenue.
a *68. Percentage-of-completion method.
b *69. Appropriate accounting method for long-term contracts.
c *70. Classification of progress billings and construction in process.
b *71. Calculation of gross profit using percentage-of-completion.
c *72. Classification of Billings on Construction account.
a *73. Advantage of completed-contract method
c *74. Revenue, cost, and gross profit under the completed-contract method.
a *75. Loss recognition on a long-term contract.
c *76. Accounting for long-term contract losses.
b *77. Treatment of estimated contract cost increase.
c *78. Revenue sources for franchise companies.
d *79. Recognizing franchise fees.
a *80. Recognizing sales-based royalty payments revenue.
b *81. Recognizing franchise revenue.
b *82. Types of franchising arrangements.
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a *83. Recognition of continuing franchise fees.
b *84. Future bargain purchase option.
b *85. Franchise category causing accounting challenges.
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MULTIPLE CHOICE—Computational
Answer No. Description
a 86. Calculate transaction price.
d 87. Computation of revenue recognized.
c 88. Recording a purchase offering a rebate.
b 89. Computation of transaction price.
d 90. Calculation of allocated transaction price.
c 91. Recording a bundled package transaction.
a 92. Computation of allocated transaction price.
b 93. Recording a sale with an unconditional right of return.
c 94. Recording a return with an unconditional right of return.
c 95. Computation of cash remitted by consignee.
b 96. Computation of consignment profit.
c 97. Recording a contract sale.
a 98. Recording the delivery of solid equipment.
b 99. Computation of capitalized contract costs.
c *100. Computation of total revenue and accounts receivable.
d *101. Computation of total construction expenses.
b *102. Computation of costs and profits in excess of billings balance.
c *103. Computation of total revenue and construction expenses.
b *104. Gross profit recognized under percentage-of-completion.
c *105. Computation of construction in process amount.
c *106. Percentage-of-completion method.
c *107. Percentage-of-completion method.
b *108. Determine cash collected on long-term construction contract.
d *109. Determine gross profit using percentage-of-completion.
c *110. Gross profit to be recognized using percentage-of-completion.
b *111. Gross profit to be recognized using percentage-of-completion.
c *112. Profit to be recognized using completed-contract method.
a *113. Gross profit to be recognized using percentage-of-completion.
b *114. Profit to be recognized using completed-contract method.
a *115. Gross profit to be recognized using percentage-of-completion.
c *116. Gross profit to be recognized using completed-contract method.
b *117. Computation of construction costs incurred.
c *118. Gross profit recognized under percentage-of-completion.
a *119. Computation of construction in process amount.
d *120. Unearned franchise revenue.
a *121. Unearned franchise revenue.
c *122. Accounting for initial and annual continuing franchise fees.
b *123. Franchise fee with a bargain purchase option.
PThese 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.
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CHAPTER 18 – REVENUE RECOGNITION Test Bank
TRUE-FALSE—Conceptual
Answer No. Description
F 1. Revenue recognition standard.
T 2. Recognition of revenue.
F 3. First step in revenue recognition process.
T 4. Recognizing revenue from a contract.
T 5. Recognizing revenue with a contract modification.
T 6. Accounting for performance obligation.
F 7. Definition of performance obligation.
F 8. Use of expected value to estimate variable consideration.
T 9. Sales transaction involving significant financing components.
F 10. Allocating the transaction price.
T 11. Sale of bundled goods at a discount.
T 12. Recognizing revenue from a performance obligation.
F 13. Satisfying performance obligations.
F 14. Recognizing revenue when right of return exists.
T 15. Definition of assurance-type warranties.
T 16. Definition of a contract liability.
T *17. Input measure for contract progress.
T *18. Reporting Construction in Process and Billings on Construction in
Process.
F *19. Construction in Process account balance.
F *20. Recognition of revenue under completed-contract method.
T *21. Principal advantage of completed-contract method.
F *22. Recognizing loss on an unprofitable contract.
F *23. Recognizing current period loss on a profitable contract.
T *24. Billings and construction in process balance vs. contract price.
F *25. Recording a loss on an unprofitable contract.
MULTIPLE CHOICE—Conceptual
Answer No. Description
d 26. Comprehensive revenue recognition model.
c 27. Revenue recognition standard.
b 28. First step in revenue recognition process.
d 29. Revenue recognition process steps.
a 30. Revenue recognition process steps.
c 31. Revenue recognition process steps.
b 32. Last step in revenue recognition process.
b 33. Definition of a contract.
d 34. Recognizing revenue from a contract.
a 35. Recording the signing of a contract.
c 36. Timing of contract recording.
d 37. Accounting for contract modification as a new contract.
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MULTIPLE CHOICE—Conceptual (cont.)
Answer No. Description
b 38. Product pricing with contract modification-No separate performance
obligation.
c 39. Performance obligation identification.
a 40. Accounting for multiple performance obligation.
d 41. Recording an extended warranty.
a 42. Recording transaction with multiple performance obligations.
b 43. Transaction price definition.
d 44. Use of expected value to estimate variable consideration.
a 45. Contract with significant financing component.
c 46. Valuing noncash consideration.
c 47. Consideration paid to customers.
b 48. Transaction price allocation.
a 49. Bundle price discount allocation.
d 50. Satisfying performance obligation.
b 51. Input measure for determining completion progress.
a 52. Cost-to-cost basis.
c 53. Sales with a right of return.
b 54. Accounting for an obligation to purchase an asset.
d 55. Bill-and-hold arrangement.
a 56. Agent role in principal-agent relationship.
b 57. Net method of recognizing revenue.
d 58. Accounting for consignments.
d 59. Recognizing revenue from consigned goods.
c 60. Recording an option to purchase a warranty.
d 61. Accounting for nonrefundable upfront fees.
d 62. Accounting for an extended warranty.
a 63. Reporting rights to receive consideration.
c 64. Reporting partial satisfaction of a multiple performance obligation.
b 65. Example of a contract liability.
d 66. Recording a contract for products.
c 67. Disclosure related to revenue.
a *68. Percentage-of-completion method.
b *69. Appropriate accounting method for long-term contracts.
c *70. Classification of progress billings and construction in process.
b *71. Calculation of gross profit using percentage-of-completion.
c *72. Classification of Billings on Construction account.
a *73. Advantage of completed-contract method
c *74. Revenue, cost, and gross profit under the completed-contract method.
a *75. Loss recognition on a long-term contract.
c *76. Accounting for long-term contract losses.
b *77. Treatment of estimated contract cost increase.
c *78. Revenue sources for franchise companies.
d *79. Recognizing franchise fees.
a *80. Recognizing sales-based royalty payments revenue.
b *81. Recognizing franchise revenue.
b *82. Types of franchising arrangements.
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a *83. Recognition of continuing franchise fees.
b *84. Future bargain purchase option.
b *85. Franchise category causing accounting challenges.
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, 4
MULTIPLE CHOICE—Computational
Answer No. Description
a 86. Calculate transaction price.
d 87. Computation of revenue recognized.
c 88. Recording a purchase offering a rebate.
b 89. Computation of transaction price.
d 90. Calculation of allocated transaction price.
c 91. Recording a bundled package transaction.
a 92. Computation of allocated transaction price.
b 93. Recording a sale with an unconditional right of return.
c 94. Recording a return with an unconditional right of return.
c 95. Computation of cash remitted by consignee.
b 96. Computation of consignment profit.
c 97. Recording a contract sale.
a 98. Recording the delivery of solid equipment.
b 99. Computation of capitalized contract costs.
c *100. Computation of total revenue and accounts receivable.
d *101. Computation of total construction expenses.
b *102. Computation of costs and profits in excess of billings balance.
c *103. Computation of total revenue and construction expenses.
b *104. Gross profit recognized under percentage-of-completion.
c *105. Computation of construction in process amount.
c *106. Percentage-of-completion method.
c *107. Percentage-of-completion method.
b *108. Determine cash collected on long-term construction contract.
d *109. Determine gross profit using percentage-of-completion.
c *110. Gross profit to be recognized using percentage-of-completion.
b *111. Gross profit to be recognized using percentage-of-completion.
c *112. Profit to be recognized using completed-contract method.
a *113. Gross profit to be recognized using percentage-of-completion.
b *114. Profit to be recognized using completed-contract method.
a *115. Gross profit to be recognized using percentage-of-completion.
c *116. Gross profit to be recognized using completed-contract method.
b *117. Computation of construction costs incurred.
c *118. Gross profit recognized under percentage-of-completion.
a *119. Computation of construction in process amount.
d *120. Unearned franchise revenue.
a *121. Unearned franchise revenue.
c *122. Accounting for initial and annual continuing franchise fees.
b *123. Franchise fee with a bargain purchase option.
PThese 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.
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