The Following Is a Diagram of the Earnings Cycle as Presented

question 54

Multiple Choice

The following is a diagram of the earnings cycle as presented by Coombes and Martin (1982) .
Products such as precious metals, or agricultural products, recognise revenue at which point in the earnings cycle shown above?

• A) Point 1.
• B) Point 4.
• C) Point 6.
• D) Point 7.
• E) None of the given answers.

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Definitions:

Accrual

Accrual accounting records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur.

Loss Contingencies

Possible financial losses that companies may face as a result of future events that have uncertain outcomes, necessitating disclosure in financial statements if they are both probable and estimable.

Gain Contingencies

Gain contingencies are potential increases in economic benefits to an organization that arise from events whose outcomes or realizations are uncertain until they occur.

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting, which does not necessarily align with the calendar year.