To Determine If a Performance Obligation Exists

question 105

Multiple Choice

To determine if a performance obligation exists,

• A) the company must provide a distinct product or service.
• B) a customer must be able to benefit from the product or service.
• C) Both A and B are correct.
• D) none of the above

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Definitions:

Cost Control

A process of managing and regulating the expenses of operating a business to maximise profitability.

Traditional Income Statement

A traditional income statement is a financial document that reports a company's financial performance over a specific period, showing revenues minus expenses to reveal net income or net loss.

Contribution Margin Format

A format of income statement that separates variable costs from fixed costs to calculate contribution margin, which helps in analyzing profitability.

Absorption Costing

A financial accounting approach that encompasses all expenses of manufacturing, like direct materials, direct labor, along with variable and fixed overhead costs, into the pricing of a product.