Which One of the Following Is an Example of an Aggressive

question 134

Multiple Choice

Which one of the following is an example of an aggressive revenue recognition policy?

• A)A firm recognizes revenue at time of collection.
• B)A firm recognizes revenue at the expiration of the return period.
• C)A firm with a liberal return policy recognizes revenue at shipment.
• D)A firm with a liberal return policy recognizes revenue at shipment with a corresponding allowance for returns and allowances.

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Definitions:

Manufacturing Overhead Applied

The allocation of estimated manufacturing overhead costs to individual units of production based on a predetermined rate.

Machine-Hours

A measure of the amount of time machines are operated, used as a basis for allocating manufacturing overhead costs in some costing systems.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated based on estimated overhead and activity levels before the period begins.

Direct Labor-Hour

A measure of the labor time directly involved in the production of goods, usually quantified in hours.