The Four Conditions That Must Exist,according to the SEC,before Revenue

question 48

Multiple Choice

The four conditions that must exist,according to the SEC,before revenue should be recognized include all of the following except

• A) there is a reasonable assurance the amount is collectible.
• B) a selling price has been determined.
• C) delivery will occur or services will be rendered within 30 days.
• D) persuasive evidence of an arrangement exists.

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Definitions:

Avoidable Costs

Expenses that can be eliminated if a particular decision is made or if a particular activity is discontinued.

Irrelevant Costs

Costs that should not influence decision-making because they will not change regardless of the outcome.

Sunk Costs

Past expenditures that have already been incurred and cannot be recovered or altered by current or future actions.

Decision Making

Selecting a course of action from competing alternatives.