If a Company Had an Agreement to Deliver Software That

question 56

Multiple Choice

If a company had an agreement to deliver software that requires significant production, modification, or customization, which method of revenue recognition should it use?

• A) percentage-of-completion method
• B) deferral method
• C) installment method
• D) cost recovery method

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Definitions:

Economic Decision Makers

Individuals or entities that make choices regarding the allocation of resources and the consumption of goods and services.

Profit

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Payment

The act of transferring money or its equivalent in return for goods, services, or fulfilling an obligation.

Land Resources

Natural resources encompassing geographical territories and the natural materials available within them, such as water, minerals, and fertile land used for agriculture.