Which of the Following Does Not Correctly Describe the Implications

question 15

Multiple Choice

Which of the following does not correctly describe the implications of an executory contract on the accounting entries and/or disclosures to be made by the purchaser and/or seller?

• A)Assets and liabilities are usually recorded at inception of the contract.
• B)Assets and liabilities are usually not recorded at inception of the contract.
• C)Contract details should be disclosed if the amounts are abnormal in relation to the entity's normal business operations.
• D)Assets and liabilities are recognized as performance has occurred.

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Definitions:

Risk-neutral

A characteristic of individuals or entities that exhibit indifference between choices with differing levels of risk, focusing solely on expected outcomes.

Expected Utility

A strategy in economics and game theory where individuals choose the option with the highest expected benefit, taking into account all future outcomes.

Risk-neutral

Refers to a mindset or condition where an individual or entity is indifferent to risk when making investment decisions, focusing instead on the potential returns without giving additional weight to the possibility of loss.

Expected Utility

a theory in economics that quantifies how choices are made when outcomes are uncertain, aiming to maximize the expected utility rather than merely the expected monetary value.