An Entity Shall Recognise Revenue from a Contract When

question 20

Multiple Choice

An entity shall recognise revenue from a contract when:

• A) the entity has satisfied the performance obligation.
• B) the goods or service have been transferred to the customer.
• C) the customer obtains control of the goods or service.
• D) All of the given answers are necessary for recognition of revenue from a contract.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the period begins based on estimated costs.

Variable Overhead

Costs that vary with the level of production output, such as utilities or indirect materials, but are not directly traceable to a specific unit of product.

Efficiency Variance

The difference between the actual input used to produce a good or service and the standard input expected, used to measure performance.

Fixed Manufacturing Overhead

Costs in the manufacturing process that do not change with the level of production, such as rent, salaries, and depreciation.