1.

On November 1, 2016, Taylor signed a one-year contract to provide handyman services on an as-needed basis to King Associates, with the contract to start immediately. King agreed to pay Taylor $4,440 for the one-year period. Taylor is confident that King will pay that amount, but payment is not scheduled to occur until 2017. Taylor should recognize revenue in 2016 in the amount of

a.) $0

b.$2,220

c.) $4,440

d.) $740

2.

Mary signed up and paid $1,740 for a 6 month ceramics course on June 1^st with Choplet Ceramics. As of August 1^st, Choplets accounting records would indicate:

a.) $580 of revenue, $1,160 of accounts receivable

b.) $580 of revenue, $1,160 of deferred revenue

c.) $1,740 of revenue, $1,740 of cash

d.) $1,160 of revenue, $580 of accounts receivable

3. Which of the following is one of the steps for recognizing revenue?

a.) Identify the performance obligations of the contract.

b.) Determine whether bad debts can be reasonably estimated.

c.) Estimate the total transaction price of the contract based on fair value.

d.) Allocate all revenue to the performance obligation with the largest stand-alone selling price.

4. On June 1^st, Lucy & Bros. received an order for 500 cupcakes. Lucy delivered the cupcakes to the client on June 25^th. A $50 deposit was received on June 5^th and the remaining $450 was paid on June 30^th. Lucy likely would recognize revenue on

a.) June 1^st.

b.) June 5^th.

c.) June 25^th.

d.) June 30^th.

5. Revenue likely is recognized over time for all of the following arrangements except for

a.) Bank earning interest on a long term loan.

b.) Construction of a building.

c.) Providing a two-year gym membership.

d.) Manufacturing generally stocked items ordered by a favored customer.

6. For contracts that include more than one separate performance obligation:

a.) Revenue is recorded over time at the fair value of each performance obligation.

b.) Revenue is recognized in the amount of the contract price on the date the last separate performance obligation is satisfied.

c.) The contract price is allocated to each performance obligation in proportion to the obligations' stand-alone selling prices.

d.) Revenue is recognized in the amount of the contract price on the date the contract is signed.

7. Binz Company provides cleaning services and sells garbage bins to office clients. On June 1^st, Binz delivered 100 garbage bins to a client, and also entered into a 5-year contract for Binz to provide cleaning services to that client. Which of the following is most likely to be true?

a.) Revenue for the garbage bins and the cleaning services must be recognized on June 1^st.

b.) Revenue for the garbage bins is recognized on June 1^st and no revenue will be recognized for the cleaning services until the end of the 5^th year.

c.) Revenue for the garbage bins is recognized on June 1^st and revenue for the cleaning service is recognized over the 5 years as those services are performed.

d.) Binz Company should not recognize any revenue until the end of the 5^th year.

8. Which of the following is an example of an extended warranty?

a.) Fancy Headphones, Inc. provides assurance that its headphones are defect-free after purchase.

b.) Azaleas Flowers assures clients that its flowers will stay fresh for at least a week.

c.) Mark Electronics offers a warranty at an affordable price that provides additional protection after the customer takes possession of the product.

d.) Erickson Electronics promises to make repairs or replace any product found to be defective within a week of purchase.

9. On January 1, 2016, Elite Advertising was contracted to run a marketing campaign for Pharm King's new dieting pills. In addition to getting a base fee of $150,000 for the 3-year campaign, Elite also may get an additional 5% of the base fee as a bonus if a targeted sales level is reached at the end of three years. Elite currently lacks sufficient information to make an estimate of the likelihood of the expected bonus, with the marketing director indicating that "If you forced me to make an estimate, I'd say we have a 50/50 chance. But don't quote me on that - it's really too early to tell." Elite concludes this contract qualifies for revenue recognition over time, and estimates variable consideration using the most likely amount. How much revenue should Elite recognize as of December 31, 2016?

a.) $50,000

b.) $51,250

c.) $52,500

d.) $57,500

10. Wilson Links Products sells a product that involves two separate performance obligations: the SwingRight golf club weight and the SwingCoach teaching software. SwingRight has a stand-alone selling price of $150. Wilson sells both the SwingRight and the SwingCoach as a package deal for $200. The SwingCoach software is not sold separately. Wilson is aware that other vendors charge $100 for similar software, and Wilson's prices are generally 10% lower than what is charged by those vendors. Wilson estimates that it incurs approximately $65 of cost per copy of the software, and usually charges 50% above cost on similar products.

Estimate the stand-alone selling price of the software using the adjusted market assessment approach.

a.) $50

b.) $80

c.) $90

d.) $97.50

11. Jing Statistical Services operates a website that links experienced statisticians with businesses that need data analyzed. Statisticians post their rates, qualifications, and references on the website, and Jing receives 25% of the fee paid to the statisticians in exchange for identifying potential customers. VetMed Associates contacts Jing and arranges to pay a consultant $1,500 in exchange for analyzing some data. Jing's income statement would include the following with respect to this transaction:

a.) Revenue of $1,500

b.) Revenue of $1,500, and cost of services of $1,125

c.) Revenue of $375

d.) Revenue of $1,875 and cost of services of $1,500

12. Which of the following is typically true for a bill-and-hold arrangement?

a.) Revenue is recognized at the point in time when the arrangement is made.

b.) Revenue is recognized at the point in time when goods are manufactured.

c.) Revenue is recognized at the point in time when the delivery of goods is made.

d.) Revenue is recognized at the point in time at which payment from the customer is received.

13. Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers purchase his work there). Sweeney recently transferred a painting on consignment to a local barbershop.

Sweeney most likely should recognize revenue when:

a.) He paints the painting, because the painting is produced while he works.

b.) When he transfers the painting to a barbershop.

c.) When the barbershop sells the painting.

d.) When the barbershop's right of return expires.