Continuing Franchise Fees Should Be Recorded by the Franchisor

question 88

Multiple Choice

Continuing franchise fees should be recorded by the franchisor

• A) as revenue when earned and receivable from the franchisee.
• B) as revenue when received.
• C) in accordance with the accounting procedures specified in the franchise agreement.
• D) as revenue only after the balance of the initial franchise fee has been collected.

Understand the impact of changes in balance sheet accounts on the cash flow statement.

Recognize correct treatments of specific items in the operating activities section of the cash flow statement.

Knowledge of how changes in operating, investing, and financing activities affect a company’s cash position.

Skills in analyzing the comparative balance sheets to identify the cash impacts of various transactions.

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Definitions:

Linear Regression Equation

An equation used in statistics to model the relationship between a dependent variable and one or more independent variables.

Slope

The rate at which the dependent variable changes with respect to an independent variable in a function or a graph.

Intercept

The point where a line or curve crosses an axis on a graph, often referring specifically to where it crosses the Y-axis.

Y-Intercept

The point where a line or curve intersects the Y-axis of a graph.