All of the Following Are Criteria That Must Be Met

question 5

Multiple Choice

All of the following are criteria that must be met before revenue can be recognized except:

• A)revenue must be earned
• B)the amount earned is measurable
• C)all sales returns and allowances have been recorded
• D)there is reasonable assurance as to the collectibility of the amount earned

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Definitions:

Cash Inflows

Money received by a business from its operations, investments, or financing activities.

Investment Outflows

Money expended on acquiring or investing in assets with the expectation of generating future returns.

Uneven Cash Flows

Cash receipts and payments that vary in amount and do not occur at regular intervals, challenging budgeting and forecasting.

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.