The Event That Triggers Revenue Recognition for the Sale of Goods

question 181

Multiple Choice

The event that triggers revenue recognition for the sale of goods is the:

• A) date a contract is signed.
• B) date cash is received.
• C) transfer of control of the goods to the purchaser.
• D) completion of the services.

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Definitions:

Manufacturing Overhead

All indirect costs related to the manufacturing process, including costs for utilities, rent, and maintenance, that are not directly tied to production.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, calculated by dividing estimated overhead costs by an allocation base.

Machine-Hours

A measure of production time, representing the hours a machine is operated within a given period.

Direct Labor-Hours

A metric for quantifying the manual work done by employees on the production floor, correlating with the labor costs of manufacturing.