What is the amount of gross profit on the project recognized by CCC during 2024? Construction in progress = Actual costs incurred + Gross profit recognized

Cannot be determined from the given information

Which of the following is not true?

Licenses for symbolic intellectual property convey a right of use, and not a right of access.

Licenses for functional intellectual property typically have revenue recognized at a point in time.

Licenses for functional intellectual property can be viewed as conveying an access right.

Software and media are examples of functional intellectual property.

Which of the following is not one of the five steps for recognizing revenue?

Estimate variable consideration.

Recognize revenue when (or as) each performance obligation is satisfied.

Determine the transaction price.

Allocate the transaction price to each performance obligation.

Revenue likely is recognized over time for all the following arrangements except for

Manufacturing generally stocked items ordered by a favored customer.

Bank earning interest on a long-term loan.

Providing a two-year gym membership.

Which of the following is not an indicator that revenue can be recognized over time?

The seller is creating an asset that has an alternative use to the seller, and the seller can receive payment for its progress even if the customer cancels the contract.

The seller is enhancing an asset that the buyer controls as the service is performed.

The customer consumes the benefit of the seller's work as the seller performs the service.

None of these answer choices are correct.

How much cash remains to be collected by CCC on the project?

Cannot be determined from the given information

Goods or services are capable of being distinct if:

the seller regularly sells the good or service separately, or the buyer could use the good or service on its own, or the buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere.

the seller regularly sells the good or service separately.

a buyer could use the good or service on its own.

a buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere.

Which of the following is not true about revenue recognition with respect to long-term construction contracts?

Long-term construction contracts typically include multiple performance obligations because of all the different types of goods or services included for each project.

Long-term construction contracts often are viewed as having a single performance obligation, because goods or services fail the "separately identifiable" criterion.

Long-term construction contracts often satisfy the criteria for recognizing revenue over time.

Long-term construction contracts require accounting for construction in progress as well as billings to customers.

What is the effect of bad debts on revenue recognition?

The seller must believe it is probable it will collect the amounts it is entitled to collect.

Bad debts must be of a remote likelihood in order to recognize revenue.

Bad debts are deducted from revenue to calculate net revenue on the income statement, similar to sales returns.

Bad debts are ignored when determining whether to recognize revenue, but recognized as an expense on the income statement.

Which of the following is not true?

Licensing fees are recognized as revenue at the end of the license period, when the seller has completed its performance obligation to provide access to its intellectual property.

Licensing fees are recognized as revenue over time whenever the seller expects its ongoing activities to affect the benefits that the buyer receives from intellectual property.

License fees are recognized as revenue over time for any license that is viewed as providing a right of access.

License fees are recognized as revenue at a point in time if the buyer expects that the seller's future activities will not affect the benefit the buyer derives from the intellectual property.

Which of the following is an example of an extended warranty?

Mark Electronics offers a warranty at an affordable price that provides additional protection after the customer takes possession of the product.

Fancy Headphones, Incorporated provides assurance that its headphones are defect-free after purchase.

Azalea's Flowers assures clients that its flowers will stay fresh for at least a week.

Erickson Electronics promises to make repairs or replace any product found to be defective within a week of purchase.

Which of the following is one of the steps for recognizing revenue?

Identify the performance obligations of the contract.

Determine whether bad debts can be reasonably estimated.

Estimate the total transaction price of the contract based on fair value.

Allocate all revenue to the performance obligation with the largest stand-alone selling price.

ADH recognizes revenue over time with respect to these contracts. In its December 31, 2023, balance sheet, ADH would report: (Cost + profits)-billings

the contract asset, cost and profits in excess of billings, of $500,000.

the contract liability, billings in excess of cost, of $300,000.

the contract asset, contract amount in excess of billings, of $1,500,000.

the contract asset, deferred profit, of $400,000.

The core revenue principle states that:

companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.

companies recognize revenue when the earnings process is virtually complete and it is probable that payments will be received.

companies recognize revenue when goods or services are transferred to the customer and payments are received.

companies recognize revenue when the goods or services are transferred to the customer in an arm's length transaction.

Revenue on a long-term contract should not be recognized according to the proportion of the performance obligation that has been completed if:

the arrangement does not qualify for revenue recognition over time.

projects are more than five years to completion.

Indiana Company began a construction project in 2024 with a contract price of $150 million to be received when the project is completed in 2026. During 2024, Indiana incurred $36 million of costs and estimates an additional $84 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed. Suppose that, in 2025, Indiana incurred additional costs of $63.75 million and estimated an additional $42.75 million in costs to complete the project. Indiana:

recognized $3.75 million loss on the project in 2025.

recognized $5.25 million gross profit on the project in 2025.

recognized $7.5 million gross profit on the project in 2025.

recognized $1.5 million loss on the project in 2025.

Which of the following is not true about accounting for long-term construction contracts?

The billings on construction contract account is a contra account to accounts receivable.

Long-term construction contracts could show a contract asset or contract liability, depending on the relation between construction in progress and billings.

Gross profit is debited to construction in progress.

When a customer is billed for payment due, billings on contracts in progress is credited at the same time accounts receivable is debited.

Indiana Company began a construction project in 2024 with a contract price of $150 million to be received when the project is completed in 2026. During 2024, Indiana incurred $36 million of costs and estimates an additional $84 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed. In 2025, Indiana incurred additional costs of $58.5 million and estimated an additional $40.5 million in costs to complete the project. Indiana:

recognized $1.5 million gross profit on the project in 2025.

recognized $15 million gross profit on the project in 2025.

recognized $13.5 million gross profit on the project in 2025.

recognized $6 million gross profit on the project in 2025.

Which of the following is not a characteristic of a distinct good or service?

It has a stand-alone selling price.

It can be used on its own or in combination with other goods or services the seller could obtain elsewhere.

It is not highly dependent on other goods or services in the contract.

It is not interrelated with other goods or services in the contract.

Binz Company provides cleaning services and sells garbage bins to office clients. On June 1 st , Binz delivered 100 garbage bins to a client, and also entered into a 5-year contract for Binz to provide cleaning services to that client. Which of the following is most likely to be true?

Revenue for the garbage bins is recognized on June 1 st and revenue for the cleaning service is recognized over the 5 years as those services are performed.

Revenue for the garbage bins and the cleaning services must be recognized on June 1 st

Revenue for the garbage bins is recognized on June 1 st and no revenue will be recognized for the cleaning services until the end of the 5 th year.

Binz Company should not recognize any revenue until the end of the 5 th year.

On April 1 of the current year, Troubled Company factored receivables with a carrying value of $85,000 for $60,000 in cash from Scrooge Lenders. The transfer was made without recourse. On April 1, Troubled would:

Debit Loss on Sale of Receivables for $25,000.

Credit Deferred Interest Expense for $25,000.

Credit Factored Accounts Receivable for $85,000.

Debit Discount on Liability for $25,000.

Baker Incorporated acquired equipment from the manufacturer on 10/1/2024 and gave a noninterest-bearing note in exchange. Baker is obligated to pay $918,000 on 4/1/2025 to satisfy the obligation in full. If Baker accrued interest of $9,000 on the note in its 2024 year-end financial statements, what is its imputed annual interest rate?

None of these answer choices are correct.

Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2024, Chez Fred's credit sales and collections were $125,000 and $131,000, respectively. What was the balance of accounts receivable on January 1, 2024, if $180 in accounts receivable were written off during 2024 and if the allowance account had a balance of $750 on December 31, 2024?

None of these answer choices are correct.

In the balance sheet at the end of its first year of operations, Dinty Incorporated reported an allowance for uncollectible accounts of $82,000. During the year, Dinty wrote off $32,000 of accounts receivable it had attempted to collect and failed. Credit sales for the year were $2,200,000, and cash collections from credit customers totaled $1,950,000. In Dinty's adjusting entry for bad debts at year-end, which of these would be included?

Debit to bad debt expense for $114,000

Credit to allowance for uncollectible accounts for $82,000

Debit to accounts receivable for $32,000

All of these answer choices are correct.

Galaxy sells used video games for cash and provides a one-week return right. Returns are material and reasonably predictable. Galaxy should:

Recognize a refund liability associated with estimated returns.

Not record sales until the right to return has expired.

Record a contra-receivable in the year of the sale.

Credit sales in the period of the return.

In the balance sheet at the end of its first year of operations, Dinty Incorporated reported an allowance for uncollectible accounts of $82,000. During the year, Dinty wrote off $32,000 of accounts receivable it had attempted to collect and failed. Credit sales for the year were $2,200,000, and cash collections from credit customers totaled $1,950,000. What accounts receivable balance would Dinty report in its first year-end balance sheet? credit sales - cash collections - write offs =

None of these answer choices are correct.

Memorex Disks sells computer disk drives with right-of-return privileges. Returns are material and reasonably predictable. Memorex should:

Record a refund liability in the year of the sale.

Not record sales until the right to return has expired.

Debit sales returns in the period of the return.

Debit sales in the period of the return.

As of December 31, 2023, Gill Company reported accounts receivable of $234,000 and an allowance for uncollectible accounts of $8,900. During 2024, accounts receivable increased by $22,500 (that change includes $7,200 of bad debts that were written off). An analysis of Gill Company's December 31, 2024, accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. Bad debt expense for 2024 would be:

None of these answer choices are correct.

Which of the following is considered a sale of receivables?

Factoring receivables without recourse

None of these answer choices are correct.

Acct 351 test

Quiz

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Business

•

University

•

Practice Problem

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Easy

Sage .

Used 4+ times

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66 questions

Show all answers

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

With respect to delaying revenue recognition until completion of a long-term contract, it is the case that:

estimated losses on the overall contract are recognized before the contract is completed.

expenses are recognized each period, but revenue is only recognized when the contract is completed.

use of this approach is not permitted under generally accepted accounting principles.

neither gains nor losses are recognized until the contract is completed.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is considered a performance obligation?

Up-front registration fees for a gym membership

Extended warranties on electronic products

Quality-assurance warranties on electronic products

A processing fee to obtain a bank loan

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The Ultimate Frisbee League (UFL) licenses its trademark to Tank-Skin Apparel. Under the license arrangement, Tank-Skin pays the UFL a $1 million initial license fee plus a bonus when annual sales of Tank-Skin merchandise reach a threshold. The license agreement is for 4 years.
Assume that the UFL anticipates that, in addition to receiving the $1 million license fee, it will receive a bonus of $2 million in year 1 of the contract and a bonus of $3 million in years 2-4 of the contract based on Tank-Skin's sales. Also assume that the UFL is convinced that it is probable there will not be a significant reversal of any revenue recognized with respect to the bonus in subsequent periods. At the inception of the contract, what is the amount of transaction price that the UFL would estimate with respect to this license arrangement?

$1,000,000

$3,000,000

$12,000,000

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In 2024, JRE2 would report gross profit (loss) of:

$(223,000).

$(150,000).

$(206,000).

$0.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Pick the option

option a

option b

option c

option d

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

On June 1^st, Lucy & Bros received an order for 500 cupcakes. Lucy delivered the cupcakes to the client on June 25^th. A $50 deposit was received on June 5^th and the remaining $450 was paid on June 30^th. Lucy likely would recognize revenue on:

June 1^st

June 5^th

June 25^th

June 30^th

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers purchase his work there). Sweeney recently transferred a painting on consignment to a local barbershop.
Sweeney most likely should recognize revenue when:

he paints the painting, because the painting is produced while he works.

he transfers the painting to a barbershop.

the barbershop sells the painting.

the barbershop's right of return expires.

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Acct 351 test

66 questions

With respect to delaying revenue recognition until completion of a long-term contract, it is the case that:

Which of the following is considered a performance obligation?

In 2024, JRE2 would report gross profit (loss) of:

Pick the option

On June 1st, Lucy & Bros received an order for 500 cupcakes. Lucy delivered the cupcakes to the client on June 25th. A $50 deposit was received on June 5th and the remaining $450 was paid on June 30th. Lucy likely would recognize revenue on:

Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers purchase his work there). Sweeney recently transferred a painting on consignment to a local barbershop.Sweeney most likely should recognize revenue when:

What is the amount of gross profit on the project recognized by CCC during 2024?Construction in progress = Actual costs incurred + Gross profit recognized

Which of the following is not true?

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On June 1^st, Lucy & Bros received an order for 500 cupcakes. Lucy delivered the cupcakes to the client on June 25^th. A $50 deposit was received on June 5^th and the remaining $450 was paid on June 30^th. Lucy likely would recognize revenue on:

Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers purchase his work there). Sweeney recently transferred a painting on consignment to a local barbershop.
Sweeney most likely should recognize revenue when:

What is the amount of gross profit on the project recognized by CCC during 2024?
Construction in progress = Actual costs incurred + Gross profit recognized