1)On 12/31/19 your company sells a product for $3,200. Included in the package is the subscription to the golden customer support service for 3 years: this special service can be purchased separately for $900. To convince the customer to purchase the product, you added 24 months of free access to a special online platform that the customer can use with the product, which would normally be sold separately for $1,400. You estimate that the product, if sold alone, would cost $1,000.

On 12/31/19, Cash is debited for...

a)$3,200

b)$1,000

c)$3,300

d)$970

2)(continued from previous question) On 12/31/19, Deferred revenue is..

A)credited for $2,300

B)credited for $970

C)debited for $1,000

D)credited for $2,230

E)debited for $2,230

F) None

3)(continued from the previous question) On 12/31/19, Revenue is...

A)Neither debited nor credited

B)Credited for $1,000

C)Credited for $3,200

D)Credited for $2,230

E)None of the above

4)

On 1/1/2015, your Company entered into a contract to develop and install a network security system for a client for $3,000. The project is completed on 12/31/2017. Information related to the contract is as follows ($ millions)

	Year 1	Year 2	Year 3
Billings during year	$ -	$ -	$ 300
Cash collections during year	$ -	$ -	$ 300
Contract price	$ 300	$ 300	$ 300
Cost incurred (in the year)	$ 40	$ 140	$ 20
Cost incurred (running balance)	$ 40	$ 180	$ 200
Estimated cost to complete	$ 160	$ 45	$ -

Your Company uses the percentage-of-completion method of accounting (i.e. recognition of profit over time) for long-term construction contracts.

Which of the following is true about the journal entries recorded at the end of YEAR 1?

A)An income statement account named "Construction in progress" is debited for $60 mill.

B)Revenue is credited for $40 mill

C)An income statement account called "Expenses for construction" is debited for $40 mill

D)All of the above

E)None of the above

5)(continued from previous question) Which of the following is trye about YEAR 2?

A)The profit from the construction recognized by your company in the income statement of YEAR 2 is $40 mill

B)Revenue is credited for $180 mill

C)The increase in the balance sheet account "Construction in progress" exceeds the profit from the construction recognized in YEAR 2

D)All of the above

E)Nonce of the above

6)(continued from previous question) Which of the following is true about the YEAR 3?

A)Cash is debited for an amount equal to the profit from the construction

B)The income statement account "Billings" is credited for $300 mill.

C)An account named "Gain from construction" is credited in order to revert the previous year's debit entry to the account "loss on construction"

D)All of the above

E)None of the above

7) A company offers all customers buying PRODUCT A in the month of October a coupon that will allow the customers to buy PRODUCT B 50% off in November. Which of the following is true?

A)This is a marketing initiative that has no impact whatsoever on the way the sale is journalized in October

B)Because of this marketing initiative, no revenue can be recorded when PRODUCT A is sold in October

C)Because of this marketing initiative, in October the company will be allowed to credit to Revenue only 50% of the cash received from the sale of PRODUCT A

D)None of the above

8) According to the new revenue recognition principle, no contract is required for a company to record revenue, a long as the company has a reasonable expectation that the buyer will eventually agree to the purchase.

A)True

B) False