All of the Following Situations Contribute to the Need for a Company

question 45

Multiple Choice

All of the following situations contribute to the need for a company to recognize deferred revenues, except for:

• A)Partially executed contracts between buyers and sellers
• B)The requirement by sellers for the prepayment of goods and services
• C)Mutually unexecuted contracts between buyers and sellers
• D)The seller has collected a deposit but not yet met the criteria for revenue recognition

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Definitions:

Net Realizable Value

The estimated selling price in the ordinary course of business minus the estimated costs of completion and the estimated costs necessary to make the sale.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired.

Fair Value

The estimated market value of an asset or liability, reflecting what a willing buyer would pay a willing seller in an arm's length transaction.

Salary Allowance

An agreed amount of money paid regularly to an employee on top of their salary for specific purposes, such as travel or housing.