18.2: Revenue Recognition Flashcards
1
Q
Liquidity is the ability…
Solvency is the ability…
A
To meet short-term obligations.
To meet long-term obligations.
2
Q
Accrual accounting assumes that financial statements should…
A
Reflect transactions in the period when they actually occur, not necessarily when cash movements occur.
3
Q
Net revenue is revenue after…
A
Adjustments (e.g., for estimated returns or for amounts unlikely to be collected).
4
Q
Operating profit is a company’s profits…
A
On its usual business activities before deducting taxes. Also called operating income.
5
Q
Unearned revenue is when a…
A
Payment received in advance of providing a good or service.
**Also called deferred revenue or deferred income.
