Multiple Choice: Revenue Recognition Select the correct answer for each of the following:

When the percentage-of-completion method is used in accounting for a long-term contract:

a. Income is reported before it is earned.

b. Income is reported earlier than under the completedcontract method.

c. More income is reported over the life of the project than under the completed-contract method.

d. Income is reported as payments are received.

Which of the following companies is least likely to use the percentage-of-completion method of accounting?

a. Textile manufacturer.

b. Aircraft manufacturer.

c. Office building contractor.

d. Law firm doing title searches on all of the homes in Baylor County.

Gold typically is valued at:

a. Lower of cost or market.

b. Cost of mining and refining.

c. Selling price less remaining costs to sell.

d. Either a orc.
When merchandise is sold f.o.b. shipping point, it means:

a. The price paid by the buyer includes the cost of transportation.

b. Transfer of title takes place when the buyer orders the merchandise.

c. Transfer of title takes place when the merchandise is received by the buyer.

d. Transfer of title takes place when the merchandise is shipped.
When merchandise is sold f.o.b. destination:

a. The carrier bears no responsibility for damage to the goods during shipping.

b. Damage to merchandise in shipment is the responsibility of the buyer.

c. Title does not pass until payment is made by the buyer.

d. Title passes at the time the goods are received by the buyer.
6. When goods are sold on consignment:

a. The consignor does not recognize income until the product is sold to a third party by the consignee.

b. The consignee takes title to the product but does not need to pay for it until it is sold.

c. The consignee must pay for the product at the time it is shipped to the consignee by the consignor.

d. The consignor recognizes income at the time the product is shipped to the consignee.