All of the Following Conditions Signal That Revenue Recognition May

question 68

Multiple Choice

All of the following conditions signal that revenue recognition may have been recorded too early except:

• A) large and volatile amounts of uncollectible accounts receivable.
• B) a decrease in the number of days accounts receivable are outstanding.
• C) unusually large amounts of returned goods.
• D) excessive warranty expenditures.

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Definitions:

Consumer Surplus

The disparity between the amount consumers propose to pay for a good or service and the amount they finally pay.

Profits

The financial gain obtained when the revenue from business activities exceeds the costs and expenses incurred in operating the business.

Price Discrimination

An approach where the same goods or services, either identical or very similar, are priced differently by the same seller in distinct markets.

Inelastic Demand

A situation where the demand for a good or service changes little when its price changes, indicating consumers' lack of sensitivity to price adjustments.