A Company Has Satisfied Its Performance Obligation When the

question 51

Multiple Choice

A company has satisfied its performance obligation when the

• A)company has received payment for goods or services.
• B)company has significant risks and rewards of ownership.
• C)company has legal title to the asset.
• D)company has transferred physical possession of the asset.

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Definitions:

Long-Term Contracts

Agreements that extend beyond one year, often relating to construction, service, or lease contracts.

Losses

Financial transactions or events that result in a decrease in assets, increase in liabilities, or both, leading to a reduction in equity or net assets.

Sale

A transaction between two parties where the buyer receives goods, services, or assets in exchange for money.

Revenue Recognition

Refers to the criteria or guidelines used by a company to recognize revenue in its financial statements, ensuring revenue is recorded when earned.