MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.

1) The time that the performance obligation is satisfied for revenue recognition is usually:

A) before the sale. B) after the sale. C) at the time of sale. D) when payment is received.

2) If consideration is received before a contract is identified and the consideration is nonrefundable, revenue may be recognized if:

A) the contract has been terminated. B) goods have been delivered. C) there is no remaining obligation to transfer goods. D) any of these answer choices is correct.

3) Assuming the requirements for recognizing revenue over time are met, the measure of completion is computed by dividing

A) profits earned to date by estimated total profits. B) costs incurred to date by estimated total costs. C) costs incurred to date by the contract price. D) profits earned to date by the contract price.

4) Muenster Company sells its network servers with a warranty than includes preventive maintenance. Muenster should account for the warranty as a(n):

A) integral part of the equipment sales. B) separate contract. C) separate performance obligation. D) accrued expense.

5) In 2017, Borden Construction was contracted to build an apartment complex for its client, Deer Park Realty Management. The project was estimated to cost $15 million; however, on December 31, 2017, when the project was 75% complete, Borden estimated that the project costs would be much less, and agreed to adjust the contract price to $10 million. Prior to December 31, 2017, Borden Construction had recognized revenue of $10 million. At year end, Borden should: A) make a correction for $2.5 million in over-recognized revenue. B) record nothing. C) record additional $5 million in revenue. D) make a correction for $5 million in over-recognized revenue.

6) Hargren Publishing offers its Accounting textbooks as e-texts through its online homework management system. Purchase of an access code provides the student with access to the e-text and online learning materials for six months. During that time, students have access to updates to the text and learning materials. Hargren should recognize revenue for purchases of access codes: A) at the end of the six-month access period. B) when they occur. C) over the six-month period during which the customer has access. D) at the beginning of the semester in which the student will use the access code.

7) The new ASC Topic 606 provides a model for revenue recognition that includes:

A) five steps. B) four steps. C) three steps. D) two steps.