Are Advanced Receipts from Customers Treated as Revenue at the Time

question 142

Multiple Choice

Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?

• A) Yes, they are treated as revenue at the time of receipt because the company has access to the cash.
• B) No, the amount of revenue cannot be adequately determined until the company completes the work.
• C) Yes, The intent of the company is to perform the work and the customer is confident that the services will be completed.
• D) No, revenue cannot be recognized until the work is performed.

---

Definitions:

Actual Production

The real quantity of goods or services produced during a specific period, as opposed to planned or theoretical outputs.

Standard Costing

A management accounting method that uses standard costs for direct materials, labor, and overhead to control expenses and assess performance.

Organisational Performance

Organisational Performance refers to how well an organization achieves its predetermined objectives, encompassing efficiency, effectiveness, and financial performance.

Performance Appraisal

A systematic evaluation of an employee's job performance and productivity in relation to pre-established criteria and objectives.