Which of the Following Is Included in the Investment Component

question 22

Multiple Choice

Which of the following is included in the investment component of GDP?

• A)Elaine pays her college tuition bill.
• B)John's law firm buys him a new computer.
• C)Laura buys a bond that McDonald's sells to raise funds.
• D)All of the above are correct.

Recognize the role of payments, including interest and progress payments, in the accounting for installment sales and construction contracts.

Identify criteria for revenue recognition, including the earned, realized, or realizable, and the critical event and measurability criteria.

Understand the accounting treatments for losses on long-term contracts and special revenue recognition cases such as franchise fees and bundled sales transactions.

Distinguish between revenue recognition methods and their impact on financial statements and retained earnings.

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Definitions:

Ski Rack

A device attached to a vehicle or placed in a location for the purpose of holding skis securely.

Possession

The actual holding or control of property or an asset, regardless of whether it is legally owned.

Standard of Care

A level of competence, diligence, and care that is expected of a professional or individual in a specific situation or industry.

Bailee's Right

The rights afforded to a person (the bailee) who temporarily possesses the personal property of another (the bailor), often including the right to use the property under agreed conditions.