Which of the Following Is a Component of the Revenue

question 7

Multiple Choice

Which of the following is a component of the revenue recognition principle?

• A) Cash is received and the amount is material.
• B) Recognition occurs when the performance obligation is satisfied.
• C) Production is complete and there is an active market for the product.
• D) Cash is realized or realizable and production is complete.

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Definitions:

Machine-Hours

A measure used in accounting to allocate manufacturing overhead costs, representing the total hours that machines are operated in the production of goods.

Number of Batches

The total count of groups or sets of items processed or produced together in a manufacturing or production process.

Total Overhead Cost

The combined indirect costs associated with the normal operations of a business, such as administrative expenses, depreciation, and utilities.

Activity-Based Costing

Activity-based costing is an accounting methodology that assigns costs to products or services based on the activities and resources required to produce them, enhancing cost accuracy.