Which of the Following Activities Does Not Violate the Revenue

question 1

Multiple Choice

Which of the following activities does not violate the revenue recognition principle?

• A) Recording revenue in December 2013 for units manufactured but not yet sold to customers
• B) Recording cash received in advance from customers as revenue when the product is not yet shipped
• C) Not recording interest earned in 2013 until the cash is received in 2014
• D) Recording cash received in advance from customers as a liability when the product is not yet shipped

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Definitions:

Insurance Coverage

The amount of risk or liability covered for an individual or entity by way of insurance services.

Constitution Authority

The legal power or right granted to an entity or person by a constitution, governing the ability to perform certain actions.

Federal Funds

Central bank reserves loaned by one bank to another, typically overnight, to meet reserve requirements.

Central Hudson

A legal test used by United States courts to determine the constitutionality of restrictions on commercial speech.