Even If the Critical Event Selected by Company Satisfies the Five

question 24

Multiple Choice

Even if the critical event selected by company satisfies the five revenue recognition criteria there can sometimes be uncertain.During such situations consideration must be given to which of the following?

• A)The critical event selected should provide reasonable and fair representation of the entity's activities.
• B)The critical event selected should be the earliest point possible in the company's earning's process.
• C)The critical event selected should be the latest point possible in the company's earning's process.
• D)The critical event selected should provide the most conservative representation possible.

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Definitions:

Prepaid Expense

Expenditures paid for in advance for goods or services to be received in the future, often including insurance premiums or rent.

Accounts Payable

Obligations or debts a company owes to its suppliers or vendors for products or services received.

Direct Method

A costing methodology that directly assigns specific costs to relevant objects without using allocation for indirect costs.

Cost Of Goods Sold

Costs directly related to the goods a company sells, covering both the materials' cost and the labor cost involved in making the product.