In Case of Deferred Revenue Liabilities, When Should Revenues Almost

question 16

Multiple Choice

In case of deferred revenue liabilities, when should revenues almost always be recorded as earned?

• A) When the company receives an order for delivery of the product or the performance of a service
• B) When the company is reasonably sure that the product can be developed and delivered
• C) When the service is performed or the product is shipped
• D) When the company receives cash for the service to be performed or the product to be delivered

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Definitions:

Job Order Costing

A cost accounting system in which costs are assigned to specific jobs or batches, typical in companies that produce unique products or jobs.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products based on a relevant driver.

Machine Hours

A unit of measure representing the operation time of machines in manufacturing or production processes.

Indirect Materials

Materials used in the production process that are not directly traceable to the finished product, such as lubricants and cleaning supplies.