The Earnings Cycle Is Complete Under Two Conditions: ________ and ________

question 226

Multiple Choice

The earnings cycle is complete under two conditions: ________ and ________.

• A) revenue recognition; matching
• B) the sale is complete; the customer has paid the company
• C) at least two years have passed; the customer has paid the company
• D) the sale is complete; the customer has promised to pay the company
• E) the cost of goods sold has been determined; operating revenues exceed operating expenses

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Definitions:

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Exercise Value

The value of an option if it were exercised at the current time; essentially the difference between the strike price and the current price of the underlying asset.

Strike Price

The specified price at which an option contract can be exercised to buy or sell the underlying asset.

Call Option

A financial contract granting the buyer the right, but not the obligation, to purchase a stock, bond, commodity, or other asset at a specified price within a specific time period.