Complete Electronics Company Sells a Point-Of-Sale Computer with a Two-Year

question 95

Multiple Choice

Complete Electronics Company sells a point-of-sale computer with a two-year service contract.Complete collects $2,000 cash for the selling price of the computer and $504 for the two-year service contract.How is revenue recognized?

• A) Complete will record Sales Revenue of $2,504 when the computer is delivered to the customer.
• B) Complete will record Sales Revenue of $1,252 per year for two years.
• C) Complete will record Sales Revenue of $2,000 when the computer is delivered and Service Revenue of $21 per month for 24 months.
• D) Complete will record Sales Revenue of $2,000 when the computer is delivered and will record revenue for the service contract as service calls are made.

---

Definitions:

Professional Misconduct

Refers to inappropriate or unethical behavior by a professional in their occupation, often leading to disciplinary action.

Accountant

A professional who performs accounting functions such as audits or financial statement analysis.

Privity

A relationship between two parties that is recognized by law, such as a contractual relationship.

Contractual Relation

The connection between parties that is established by the terms and conditions of a contract.