Under GAAP, with Respect to Multiple-Element Arrangements, If the Revenue

question 45

Multiple Choice

Under GAAP, with respect to multiple-element arrangements, if the revenue for a particular part of a multiple-element arrangement does not qualify for separate recognition, it is:

• A) Never recognized.
• B) Recognized when the contract is signed or persuasive evidence of an arrangement exists.
• C) Recognized when revenue for the other parts is recognized.
• D) Recognized at the end of the contract.

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Definitions:

Throughput

The rate at which goods or services are produced or processed in a system.

Break-Even Analysis

A means of finding the point, in dollars and units, at which costs equal revenues.

Variable Costs

Costs that vary directly with the level of production or business activity, such as materials and labor.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.