The Appropriate Approach to Recognize Long-Term Contract Revenue Under ASPE

question 28

Multiple Choice

The appropriate approach to recognize long-term contract revenue under ASPE is

• A) earnings approach to revenue recognition.
• B) asset-liability approach to revenue recognition.
• C) cash-based approach to revenue recognition.
• D) earned and realized approach to revenue recognition.

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Definitions:

Long-Run Equilibrium

A state in which all firms in a market or industry are making normal profits and there is no incentive for firms to either enter or exit the market.

Price

The monetized value required, forecasted, or offered in return for a service or good.

Marginal Cost

The increase in total cost that arises from an extra unit of production, focusing on the cost variation from an additional output.

Marginal Revenue Curve

A graphical representation that shows how additional sales revenue changes with each extra unit of output sold.