Revenue Recognition

Question 1

What is the definition of realization in accounting?

A The act of recording an accounting transaction

B Meeting the criteria to record revenues

C Conversion of an asset to cash

D Using up assets to generate revenues

Answer 1

C

Question 2

What is the definition of recognition in accounting?

A The act of recording an accounting transaction

B Meeting the criteria to record revenues

C Conversion of an asset to cash

D Using up assets to generate revenues

Answer 2

A

Question 3

For the sale of goods, when are revenues usually recognized?

A When cash is received

B When goods are delivered to the customer

C When an order is placed

D When the goods are manufactured

Answer 3

B

Question 4

For the sale of services, when should revenue be recognized?

A When an order is placed

B When services are rendered

C When cash is received

D When customers are billed

Answer 4

B

Question 5

Under the matching principle, companies seek to match which two accounting items?

A Liabilities with Assets

B Goods with Services

C Expenses with Revenues

D Cash with Debt

Answer 5

C