SAB 101 Was Issued by the FASB to Clarify Its

question 25

True/False

SAB 101 was issued by the FASB to clarify its guidelines on revenue recognition.

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Definitions:

Special Order

A one-time order that is not considered part of the company’s normal ongoing business.

Capacity

The maximum output that a business can produce in a given period with available resources.

Production Constraint

Any factor that limits the volume or type of production a company can achieve, such as equipment capacity or availability of materials.

Contribution Margin

The amount of revenue from sales that exceeds the variable costs associated with producing a product, indicating how much revenue contributes towards covering fixed costs and profit.