In Which of the Following Situations Can a Company Recognize

question 44

Multiple Choice

In which of the following situations can a company recognize revenue under GAAP?

• A)A contract is signed for goods to be delivered next week.
• B)Cash is received for goods to be delivered next week.
• C)A company completes the production of goods for inventory and knows the costs incurred with certainty.
• D)A company ships the goods that it received a deposit for the previous week.

---

Definitions:

Unwritten Employment Contract

An implied agreement between an employer and employee that is not formally documented but is understood and accepted by both parties.

Downsizing

A corporate strategy involving the reduction of a company's workforce to improve efficiency or adapt to new market conditions.

Short-term Cost Adjustment

Immediate actions taken to modify expenses in response to financial pressures or budget constraints.

Exploration Work Shutdowns

A halt in exploratory activities, often in industries like mining or oil exploration, due to various reasons including financial constraints, environmental concerns, or strategic realignments.