Red Company Created Advertising Copy for a Client

question 35

Multiple Choice

Red Company created advertising copy for a client.Which of the following does not indicate that the transaction meets the SEC's four criteria for revenue recognition?

• A)The company and the customer agree that the customer owes for the service.
• B)Both parties understand the price.
• C)The goods or services have been used to produce revenue.
• D)There is a reasonable expectation that the customer will pay the bill.

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Definitions:

Random Variable

An attribute whose numerical values stem from the occurrence of a random event.

Probability

Probability is a measure of the likelihood that an event will occur, often expressed as a number between 0 and 1, where 1 indicates certainty.

Mutually Exclusive Event

Situations or events that cannot occur at the same time, meaning the occurrence of one event precludes the occurrence of the other.

Independent Event

An independent event is an event whose outcome is not influenced by the outcome of another event; in probability, this means that the occurrence of one event does not change the probability of another.