Are Prepaid Amounts Received from Customers Treated as Revenue at the Time

question 129

Multiple Choice

Are prepaid amounts received 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.

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Definitions:

ILSAC

The International Lubricant Standardization and Approval Committee is an organization that defines the performance standards for lubricants, oils, and greases used in vehicles and engines.

API Oil Ratings

Standards set by the American Petroleum Institute to classify the performance and quality level of engine oils.

Severe Service Conditions

Driving conditions that are particularly demanding on a vehicle's systems and components, such as frequent short trips, heavy loads, or extreme temperatures.

ACEA Standards

Standards created by the Association of Constructors of European Automobiles.