Premature Revenue Recognition Is the Recognition of Revenue Before Accounting

question 62

True/False

Premature revenue recognition is the recognition of revenue before accounting standard requirements for recording revenue have been met.An example of this is creating fictitious customers.

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Definitions:

Activity Cost Pools

Groupings of individual costs related to a particular activity, used in activity-based costing to allocate costs more accurately.

Direct Labor-hours

The overall hours that workers, who are a part of the manufacturing operations, put in.

Activity-based Costing

A costing method that allocates overhead costs to products based on the activities required to produce those products.

Record-keeping Cost

Expenses associated with maintaining accurate and comprehensive records of a company’s financial transactions and operations.