1.

When a note receivable is received in return for the selling products, what is the amount of sales revenue recognized?

a. The present value of the note receivable.

b. The cost of good sold plus the historical gross margin.

c. The fair market value of the products sold.

d. The replacement cost of the products sold.

2. Assume a contract for the sale of goods specifies that payment is to be made 15 months prior to delivery of a product. The seller is likely to do which of the following with respect to the time value of money over the life of the contract?

a. Recognize interest expense.

b. Recognize interest revenue.

c. Recognize additional cost of goods sold.

d. Ignore the time value of money.