Waldman Associates Received a Written, Approved Contract to Deliver Economic

question 263

Multiple Choice

Waldman Associates received a written, approved contract to deliver economic consulting services, with service and payment commencing in one month. The contract specifies the services that Waldman is to perform, and the payment terms. Waldman and the customer both can cancel the contract without penalty prior to commencing service. Does Waldman have a contract for purposes of revenue recognition on the day the contract is received?

• A) Yes, because Waldman has a written approved contract.
• B) No, because Waldman and the customer can cancel without penalty, and neither has performed an obligation under the contract.
• C) Maybe, depending on whether Waldman can estimate collectability of the receivable.
• D) There is insufficient data on which to base an answer.

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Definitions:

Strategy Analysis

The evaluation of the plans an organization develops to achieve its long-term objectives.

Organizational Environment

Encompasses all external and internal factors that influence the operations, culture, and performance of an organization.

Competitive Position

Describes an organization's relative standing in its industry or market, based on factors like market share, quality of products, and brand reputation.

Resource Allocation

The process of assigning and managing assets in a manner that supports an organization's strategic goals.