Under the ASPE Revenue Recognition Standard, a Sales Transaction Must

question 92

Multiple Choice

Under the ASPE revenue recognition standard, a sales transaction must satisfy three criteria before the seller can recognize revenue. Which of the following is not a criteria?

• A) It is probable that the customer will pay for the goods or services when payment becomes due.
• B) The amount of revenue to be received can be reliably measured.
• C) There has been a decrease in future economic benefits caused by a decrease in an asset or an increase in a liability.
• D) The ownership (or control) and benefits of the goods have been transferred to the customer, or the services have been provided to the customer.

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Definitions:

Common Stock Account

An equity account that represents the ownership interests of common shareholders in a company.

Stated Value

A value assigned to a company's no-par value stock by the company’s board of directors.

Shares

Shares represent an ownership stake in a company or financial asset, distributing profits equally through dividends if any are declared.

Earnings Per Share

A measure of a company's profitability calculated as net income divided by the number of outstanding shares of its common stock.