When Does a Company Account for Revenue If It Uses

question 65

Multiple Choice

When does a company account for revenue if it uses cash basis accounting?

• A)when services are performed,even though cash may be received at a later date
• B)when cash is received after the service is performed
• C)when the services are being performed
• D)when cash is received,either prior to,at the time of,or after the services are performed

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Definitions:

Variable Costing

A method of inventory costing that includes only variable production costs (materials, labor, and variable overhead) in the cost of goods sold, treating fixed overhead as a period expense.

Net Operating Income

The profit a company makes after deducting operating expenses like wages, depreciation, and cost of goods sold, but before interest and taxes.

Operating Loss

A situation where a company's operating expenses exceed its gross profits or revenues, indicating that it is not making money from its core operations.

Year 2

Commonly refers to the second year of operation or existence in various contexts, such as financial reporting or the lifespan of an asset.