A Contract Does Not Exist for Purposes of Applying the Revenue

question 48

Multiple Choice

A contract does not exist for purposes of applying the revenue recognition principle in all of the following cases except for when:

• A) The seller believes it is not probable that it will collect the amount it's entitled to receive under the contract.
• B) The seller and buyer did not sign a formalized written contract.
• C) The seller and buyer can terminate the contract without penalty and neither has performed any obligations under the contract.
• D) The seller believes it is highly likely but not certain that the buyer will agree to the terms of the contract.

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Definitions:

Proletariat

The class of workers or laborers who do not own the means of production and must sell their labor to survive.

Long-held Beliefs

Ideas or convictions that have been accepted and maintained over an extended period.

Traditional Authority

A form of leadership in which the authority of an organization or a ruler is largely tied to tradition or custom.

Rational

Pertains to decision-making processes that are based on logical reasoning and systematic analysis of alternatives.