When Should a Company Recognize Revenue Under GAAP

question 41

Multiple Choice

When should a company recognize revenue under GAAP?

• A)When delivery has occurred or services have been provided (rendered).
• B)When the price is measurable.
• C)When the promised performance has been satisfied.
• D)All of the choices are necessary to recognize revenue.

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Definitions:

Profits

Financial gains realized when the revenue earned from business activities exceeds the expenses, costs, and taxes involved in sustaining the activities.

Intercept

In the context of linear regression, this represents the expected value of the dependent variable when all independent variables are zero; it is the point at which the regression line crosses the y-axis.

Least-squares Regression Line

The least-squares regression line minimizes the squared differences between observed and predicted values, providing the best fit line through data points.

Forbes 500 List

An annual list published by Forbes magazine that ranks the top 500 U.S. companies based on their revenue.