Under accrual accounting, revenue is recognized when
a. the firm has performed all, or most of, the services it expects to provide.
b. the firm has received cash, or some other asset such as a receivable, whose cash-equivalent value it can measure with reasonable precision.
c. the firm has significant uncertainty about the amount and timing of the cash inflows and outflows from the sales transaction.
d. both a and b must be present.
e. none of the above.
D
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In the context of an audit of financial statements, substantive procedures are audit procedures that:
A. are primarily designed to discover significant subsequent events. B. may be eliminated under certain conditions. C. may be either tests of details of transactions, tests of details of account balances, or analytical procedures. D. will increase proportionately with an increase in the auditor's reliance on internal control.
Liabilities whose amounts must be estimated are disclosed in financial statements by
A) including details in the footnotes. B) describing the estimated liabilities among the liabilities on the balance sheet but not including the amounts in the liability totals. C) an appropriation of retained earnings. D) including the amounts in the liability totals.
Garcia Industries has sales of $187,500 and accounts receivable of $18,500, and it gives its customers 25 days to pay. The industry average DSO is 27 days, based on a 365-day year. If the company changes its credit and collection policy sufficiently to cause its DSO to fall to the industry average, and if it earns 8.0% on any cash freed up by this change, how would that affect its net income, assuming other things are held constant? Assume all sales to be on credit. Do not round your intermediate calculations.
A. $333.37 B. $311.15 C. $370.41 D. $422.27 E. $459.31
Many HMOs have not enjoyed providing managed care for Medicare because:
A) the reimbursement schedule is inadequate or unattractive B) they object to being forced to participate in the program C) older patients are typically unprofitable for all insurers and health care providers D) both A and B