Which of the Following Statements Is Not in Accordance with AAS

question 20

Multiple Choice

Which of the following statements is not in accordance with AAS 118 "Revenue" with respect to revenue recognition?

• A) Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the entity.
• B) When goods are sold or services are rendered in exchange for dissimilar goods or services, the exchange is regarded as a transaction which generates revenue.
• C) The amount of revenue arising on a transaction is usually determined by agreement between the entity and the buyer or user of the asset.
• D) When goods or services are exchanged or swapped for goods or services which are of a similar nature and value, the exchange is not regarded as a transaction which generates revenue.
• E) E: None of the given answers.

Comprehend the relationship between market price, costs of production, and producer surplus.

Analyze the changes in surplus and deadweight loss resulting from market underproduction or overproduction.

Assess how price changes affect surplus and market efficiency.

Understand the role of equilibrium in maximizing total surplus in a market.

---

Definitions:

Producer Surplus

The gap between the price producers are ready to take for offering a product or service and the actual payment they receive.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit consumers receive.

Producer Surplus

The difference between what producers are willing and able to supply a good for and the price they actually receive, measuring the benefit to producers.

Total Surplus

The total net gain to society from creating and consuming a product or service, encompassed by the combination of consumer and producer surplus.