Accounting Chapter 5

What is the first step in the Five-Step Model to determine when and how much revenue to recognize?

• Identify the performance obligations in the contract

• Determine the transaction price

• Identify the contract(s) with the customer

• Recognize revenue when the entity satisfies its performance obligations

Which step involves determining the transaction price in the Five-Step Model?

• Step 1

• Step 2

• Step 3

• Step 4

In the Five-Step Model, what is done after identifying the performance obligations in the contract?

• Recognize revenue when the entity satisfies its performance obligations

• Allocate the transaction price to those performance obligations

• Identify the contract(s) with the customer

• Determine the transaction price

What is the final step in the Five-Step Model to recognize revenue?

• Allocate the transaction price to those performance obligations

• Recognize revenue when the entity satisfies its performance obligations

• Identify the contract(s) with the customer

• Determine the transaction price

What is a trade discount?

• A reduction in price to encourage a business customer to buy

• A fee charged for late payment

• A tax applied to imported goods

• A bonus given to employees

What do shipping terms dictate?

• The color of the packaging

• The date on which ownership of goods transfers to the buyer

• The method of payment

• The type of transportation used

When does ownership change hands in FOB Shipping Point?

• When the goods are delivered to the customer

• When the goods leave the seller’s shipping dock

• When the payment is received

• When the contract is signed

What does FOB stand for?

• Free on Board

• Freight on Board

• Fast on Board

• First on Board

What is one benefit of accepting credit cards and debit cards for a business?

• Decreases sales

• Increases sales dramatically

• Eliminates transaction fees

• Reduces customer base

What is the typical fee charged by credit card companies for sales transactions?

• 0.5% - 1%

• 1% - 2%

• 2% - 3%

• 3% - 4%