The Converged Standard on Revenue Recognition

question 55

Multiple Choice

The converged standard on revenue recognition

• A)reduces the number of disclosures required for revenue reporting.
• B)increases the complexity of financial statement preparation.
• C)recognizes and measures revenue based on changes in assets and liabilities.
• D)simplifies revenue recognition practices across entities and industries.

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Definitions:

Warranty Contract

An agreement where a seller promises to repair or replace a product if it breaks or malfunctions within a certain period of time.

Warranty Expenses

Costs that a company anticipates it will incur as a result of repairing or replacing products under warranty.

Income Statement

A financial report detailing a company's financial performance, including all income and expenses, ultimately showing the profit or loss over a defined time.

FICA Tax Rate

The percentage of an employee's gross earnings required by law to be withheld by the employer for Social Security and Medicare taxes in the United States.