Which of the following is not one of the steps for recognizing revenue?Multiple ChoiceAllocate the transaction price to the performance obligations.Estimate the total transaction price of the contract based on the sum of the stand-alone selling prices of the goods and services in the contract.Identify the performance obligations of the contract.Identify the contract with the customer.
Question
Which of the following is not one of the steps for recognizing revenue?Multiple ChoiceAllocate the transaction price to the performance obligations.Estimate the total transaction price of the contract based on the sum of the stand-alone selling prices of the goods and services in the contract.Identify the performance obligations of the contract.Identify the contract with the customer.
Solution
To recognize revenue, there are several steps that need to be followed. One of these steps is to identify the contract with the customer. This involves determining the existence of a contract and assessing the rights and obligations of both parties. Another step is to identify the performance obligations of the contract. This includes identifying the goods or services that are promised to the customer. Once the performance obligations are identified, the next step is to estimate the total transaction price of the contract. This involves determining the amount of consideration that the entity expects to receive in exchange for fulfilling its obligations. To allocate the transaction price to the performance obligations is another step in recognizing revenue. This requires determining how the total transaction price should be allocated to each performance obligation based on their relative stand-alone selling prices. Finally, the last step is to recognize revenue when or as the entity satisfies each performance obligation. This typically occurs when control of the promised goods or services is transferred to the customer.
Similar Questions
Which of the following is not a step in the recognition of revenue? Reading required: Learning objective 16.3 on page 520Group of answer choicesAllocate the buying price to the goods or services.Identify the performance obligation.Determine the transaction price.Recognise revenue when the entity satisfies a performance obligation.
The first step in the recognition of revenue is: Reading required: Learning objective 16.3.1 on pages 520-521Group of answer choicesidentify the performance obligation in the contract.identify the contract or contracts with the customer.determine the transaction price.allocate the transaction price to the performance obligation.
In general, revenue is recognized when:Multiple Choiceproduction is completed.goods or services are transferred to the customer.a purchase order is received.cash is collected.
Which of the following is true about revenue recognition under ASC 606?Multiple ChoiceConstruction contracts are typically broken into the various separate goods and services that are included in them for purposes of revenue recognition.The time value of money is considered when estimating all transaction prices.The realization principle guides revenue recognition.Collectibility of the receivable is considered when determining whether revenue can be recognized.
Total revenue equals:Multiple choice question.price times cost.cost times output.output times quantity.price times quantity.
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