Revenue Recognition and
Accounting Exam
1. The third step in the process for revenue recognition is to:
A. Identify the contract with customers.
B. Allocate transaction price to the separate performance obligations.
C. Determine the transaction price.
D. Identify the separate performance obligations in the contract.
2. Which of the following is not a separate performance obligation?
A. A service that is distinct within the context of the contract.
B. A product warranty that covers only manufacturing defects for the first
90 days.
C. A software license that is transferred to the customer.
D. A maintenance service offered to the customer for an additional fee.
3. MegaStore offers a discount on a carrying case when the case is
purchased with a laptop. The carrying case normally costs $100 but is $60
with the laptop. MegaStore anticipates an 80% chance customers will
purchase the case with the laptop. If 500 laptops are sold with this discount
offer, what is the total stand-alone selling price MegaStore would use for
allocating revenue for the carrying case discount option?
A. $0
B. $16,000
C. $20,000
D. $30,000
4. TechCorp sells servers with a 1-year assurance-type warranty and offers
an extended 3-year warranty for $1,800. On October 1, a server system was
sold for $8,000 and the extended warranty for $1,800. The journal entry to
record this sale would include:
A. Credit to Warranty Revenue of $9,800
B. Credit to Sales $8,000 and Unearned Warranty Revenue $1,800
C. Credit to Warranty Revenue of $1,800
D. Credit to Sales of $9,800
5. FreshMeals received an order for 300 sandwiches on July 10, delivered
them July 20, received a $75 deposit on July 12, and the balance of $525 on
July 25. Revenue is recognized on:
A. July 10
B. July 12
, C. July 20
D. July 25
6. Superb Computers sells laptops with a 1-year technical support package
for $1,500. Separately, the laptop costs $1,260 and support costs $540. How
much revenue should Superb recognize for the month ended May 31
(monthly basis)?
A. $1,500
B. $1,260
C. $1,088
D. $1,075
7. Sarah has a consulting contract paying $2,000/month for four months,
plus a 70% chance of $5,000 or a 30% chance of $2,000 additional payment.
Using expected value, how much revenue is recognized for the first month?
A. $2,000
B. $3,250
C. $3,025
D. $3,200
8. BlueSky Property Management has a 3-year contract for $60,000/year
plus a 20% bonus if satisfaction exceeds a target (80% chance). Using the
most likely value, what revenue should BlueSky recognize in 2024?
A. $60,000
B. $66,000
C. $72,000
D. $84,000
9. TechInnovations licenses software for $50,000, granting rights to use it
as-is at the time of transfer. No further obligations exist. How much revenue
is recognized in the first year?
A. $0
B. $12,500
C. $50,000
D. Cannot be determined
10. On September 10, 2024, Elegant Home shipped 50 sofa sets on consignment to Comfort
Living, Inc. The cost of each sofa set was $420 each. The cost of shipping the sofa sets
amounted to $2,000 and was paid for by Elegant Home. On January 5, 2025, the consignee
reported the sale of 35 sofa sets at $980 each. The consignee remitted payment for the amount
due after deducting a 5% commission, advertising expense of $750, and delivery and setup
costs of $900.
Accounting Exam
1. The third step in the process for revenue recognition is to:
A. Identify the contract with customers.
B. Allocate transaction price to the separate performance obligations.
C. Determine the transaction price.
D. Identify the separate performance obligations in the contract.
2. Which of the following is not a separate performance obligation?
A. A service that is distinct within the context of the contract.
B. A product warranty that covers only manufacturing defects for the first
90 days.
C. A software license that is transferred to the customer.
D. A maintenance service offered to the customer for an additional fee.
3. MegaStore offers a discount on a carrying case when the case is
purchased with a laptop. The carrying case normally costs $100 but is $60
with the laptop. MegaStore anticipates an 80% chance customers will
purchase the case with the laptop. If 500 laptops are sold with this discount
offer, what is the total stand-alone selling price MegaStore would use for
allocating revenue for the carrying case discount option?
A. $0
B. $16,000
C. $20,000
D. $30,000
4. TechCorp sells servers with a 1-year assurance-type warranty and offers
an extended 3-year warranty for $1,800. On October 1, a server system was
sold for $8,000 and the extended warranty for $1,800. The journal entry to
record this sale would include:
A. Credit to Warranty Revenue of $9,800
B. Credit to Sales $8,000 and Unearned Warranty Revenue $1,800
C. Credit to Warranty Revenue of $1,800
D. Credit to Sales of $9,800
5. FreshMeals received an order for 300 sandwiches on July 10, delivered
them July 20, received a $75 deposit on July 12, and the balance of $525 on
July 25. Revenue is recognized on:
A. July 10
B. July 12
, C. July 20
D. July 25
6. Superb Computers sells laptops with a 1-year technical support package
for $1,500. Separately, the laptop costs $1,260 and support costs $540. How
much revenue should Superb recognize for the month ended May 31
(monthly basis)?
A. $1,500
B. $1,260
C. $1,088
D. $1,075
7. Sarah has a consulting contract paying $2,000/month for four months,
plus a 70% chance of $5,000 or a 30% chance of $2,000 additional payment.
Using expected value, how much revenue is recognized for the first month?
A. $2,000
B. $3,250
C. $3,025
D. $3,200
8. BlueSky Property Management has a 3-year contract for $60,000/year
plus a 20% bonus if satisfaction exceeds a target (80% chance). Using the
most likely value, what revenue should BlueSky recognize in 2024?
A. $60,000
B. $66,000
C. $72,000
D. $84,000
9. TechInnovations licenses software for $50,000, granting rights to use it
as-is at the time of transfer. No further obligations exist. How much revenue
is recognized in the first year?
A. $0
B. $12,500
C. $50,000
D. Cannot be determined
10. On September 10, 2024, Elegant Home shipped 50 sofa sets on consignment to Comfort
Living, Inc. The cost of each sofa set was $420 each. The cost of shipping the sofa sets
amounted to $2,000 and was paid for by Elegant Home. On January 5, 2025, the consignee
reported the sale of 35 sofa sets at $980 each. The consignee remitted payment for the amount
due after deducting a 5% commission, advertising expense of $750, and delivery and setup
costs of $900.
