Accounting exam 2 Flashcards

which of the following is not true about accounting for long-term construction contracts quizlet

Forgetting to accrue salaries and wages payable. Buying raw materials from an affiliated company. Knowingly classifying a material non-current receivable as a current receivable. The arrangement does not qualify for revenue recognition over time. June 25th, Revenue should be recognized when control passes to the customer, which typically occurs upon delivery. A common output method used to measure progress towards completion is to determine the proportion of promised goods or services that have been transferred to date.

Requires the receipt of cash. Result of a past transaction. Recognized under the percentage-of-completion method. A company has substantially completed what it must in order to be entitled to the benefits represented by the revenues.

Fundamental Financial Accounting Concepts

It is realized. It is realizable. It is realized or realizable and it is earned. Miga Company and Porter Company both bought a new delivery truck on January 1, 2008.

The third step is „Determine the transaction price”, which is not necessarily based on the sum of the stand-alone selling prices of goods and services in the contract. C. Retained earnings will be greater if the gain is reported as part of net income. All amounts reported in the income statement to calculate net income for the year accumulate in the retained earnings account. All amounts reported as part of other comprehensive income accumulate in the accumulated other comprehensive income account. Both retained earnings and accumulated other comprehensive income are equity accounts. This means that reporting the gain under either choice has no effect on total equity , but the choice affects the amount of net income.

Ch18 Revenue Recognition

Consignment arrangements normally do not qualify for revenue recognition until delivery is made to the end customer. Prior to that point, control of goods is viewed as having been retained by the consignor, not by the consignee, so the consignor retains the goods in the consignor’s inventory. In this case, that means that Guerin will retain the painting in its inventory until the painting is sold to an end customer.