Which of the Following Is Not True About Contract Liabilities

question 49

Multiple Choice

Which of the following is not true about contract liabilities?

• A) Contract liabilities are only recognized when the seller has a conditional right to receive payment.
• B) Contract liabilities might be called deferred revenue.
• C) Contract liabilities are recognized when the seller has been paid in advance of satisfying its performance obligations.
• D) Contract liabilities may be shown on a separate line of the balance sheet.

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Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period of time, leading to the net profit or loss.

Breakeven Analysis Account

A financial calculation that determines the point at which the cost of producing a product equals the revenue made from selling the product.

Quick Ratio

A financial metric that measures a company's ability to meet its short-term obligations with its most liquid assets.

Cash in Hand

The amount of cash a company or individual possesses that is readily available for use.