Revenue Recognition Quiz

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Questions and Answers

Which principle requires companies to recognize revenue in the accounting period in which the performance obligation is satisfied?

  • Revenue Recognition Principle (correct)
  • Matching Principle
  • Expense Recognition Principle
  • Conservatism Principle

When should Dave's Dry Cleaning record revenue for the service performed?

  • In July when it received the cash
  • In the first week of July when customers claim and pay for their clothes
  • In June when it performed the service (correct)
  • In the accounting period when it satisfies the performance obligation

What is the expense recognition principle also known as?

  • Revenue Recognition Principle
  • Conservatism Principle
  • Matching Principle (correct)
  • Materiality Principle

According to the expense recognition principle, when should expenses be recognized?

<p>Expenses should follow the revenues (A)</p> Signup and view all the answers

If a company agrees to perform a service or sell a product to a customer, what does it have?

<p>A performance obligation (B)</p> Signup and view all the answers

According to the revenue recognition principle, companies recognize revenue in the accounting period in which the performance ______ is satisfied.

<p>obligation</p> Signup and view all the answers

Dave’s Dry Cleaning should record revenue in ______ when it performed the service rather than in July when it received the cash.

<p>June</p> Signup and view all the answers

Expense recognition is tied to ______.

<p>revenues</p> Signup and view all the answers

Accountants follow the rule of letting ______ follow the revenues when recognizing expenses.

<p>expenses</p> Signup and view all the answers

When a company agrees to perform a service or sell a product to a customer, it has a ______ obligation.

<p>performance</p> Signup and view all the answers

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