Question Details

When is revenue generally recognized 



1.	The Allowance for Doubtful Accounts, which appears as a deduction from Accounts Receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of the
a.	consistency characteristic.
b.	expense recognition principle.
c.	materiality constraint.
d.	revenue recognition principle.
	2.	The accounting principle of expense recognition is best demonstrated by
a.	not recognizing any expense unless some revenue is realized.
b.	associating effort (expense) with accomplishment (revenue).
c.	recognizing prepaid rent received as revenue.
d.	establishing an Appropriation for Contingencies account.
	3.	Application of the full disclosure principle
a.	is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits.
b.	is violated when important financial information is buried in the notes to the financial statements.
c.	is demonstrated by the use of supplementary information presenting the effects of changing prices.
d.	requires that the financial statements be consistent and comparable.
	4.	Which of the following is an argument against using historical cost in accounting?
a.	Fair values are more relevant.
b.	Historical costs are based on an exchange transaction.
c.	Historical costs are reliable.
d.	Fair values are subjective.

	5.	When is revenue generally recognized ?
a.	When cash is received.
b.	When the warranty expires.
c.	When production is completed.
d.	When the sale occurs.




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