6. Normally, revenue is recognized

a. When the customer's order is received

b. Only when a transaction creates an account receivable

c. When title to the goods changes

d. When the customer's order is accompanied by a check

7.Which of the following statements is true regarding agricultural produce?

a. In all cases, an entity shall measure agricultural produce at a fair value less cost of disposal at the point of harvest

b. The fair value of agricultural produce at the point of harvest can always be measured reliably

c. The fair value measurement of agricultural produce stops at the time of harvest

d. All of these statements are true regarding agricultural produce

8. Which one of the following may be recognized as revenue?

a. Cash deposit received for lay-away sales

b. Cash received in payment of note receivable

c. Cash from advance magazine subscription

d. Cash reimbursement from government for calamity losses sustained

9. When applying the provisions of PAS 18, Revenue , which of the followingis not among the situations in which an enterprise may retain the significant risks and rewards of ownership on the goods?

a. When the receipt of revenue from a particular sale is contingent on the derivation of revenue by the buyer from its sale of goods.

b . When the enterprise retains an obligation for unsatisfactory performance covered by normal warranty provisions.

c . When the goods are shipped subject to installation and is a significant part of the contract which has not yet been completed by the enterprise.

d. When the buyer has the right to rescind the purchase for a reason specified in the salesncontract and the enterprise is uncertain about the possibility of return.

10. Revenue may, under proper circumstances, be recognized in which of the following circumstances?

a. When goods marked at 150 percent gross margin on cost are delivered to the consignee

b.. When an entity's loan from government is forgiven

c. When at least fifty percent of the selling price is received in a "lay-away sale"

d.. When accounts receivable are assigned on a with recourse basis

11. Which of the following involves recognizing an expense?

a. A machinery is used in the production of goods for sale

b. A delivery truck is used in complying with the company's sales policy of FOB Destination

c. A sales discount is granted to customer who pays within the discount period

d. Previously unrecorded wages are paid to laborers engaged in constructing a building for a company's own use

12. Alice Company assigned its receivable to MC Bank on a without-recourse basis. Control was surrendered in the transaction to MC Bank. Alice received cash as a result of the transaction, which is best described as

a. Loan from MC Bank collateralized by Aice's accounts receivable

b. Loan from MC Bank to be repaid by the proceeds from Alice's accounts receivable

c. Sale of Alice's accounts receivable to Joy, with the risk of uncollectible accounts retained by MC Bank.

d. Sale of Alice's accounts receivable to Joy, with the risk of uncollectible accounts transferred to MC Bank

13. Under the realization principle, revenue from sale of products is recognized

a. At date of delivery to the customers

b. When the customers are billed

c. When the inventories are readied for shipment

d. Upon receipt of cash payment

14. Which of the following would be matched with current revenue on a basis other than association of cause and effect?

a. Depreciation

b. Cost of goods sold

c. Sales commission

d. Warranty costs

15. The accounting concept of matching is best demonstrated by

a. Recognizing prepaid rent received as revenue

b. Associating effort (cost) with accomplishment (revenue)

c. Establishing an allowance for possible market declines in inventory value

d.. Not recognizing any expense unless some revenue is realized.

16. Which of the following types of losses is excluded from the determination of current period net income?

a. Material losses resulting from early extinguishment of a company's bonded indebtedness

b. Material losses resulting from adjustments specifically related to operations of prior years

c. Material losses resulting from unusual sales of assets not acquired for resale

d. Material losses resulting from the write-off of intangibles.

17. An expiration of cost which is incurred without compensation or return and is not absorbed as cost of revenue is called

a. Indirect cost

b. Loss

c. Deferred credit

d. Deferred charge

18. Which of the following is a period cost?

a. Factory overhead

b. Work in process

c. Selling expense

d. Direct labor

19. Are the following statements regarding profit true or false?

(1) Profit is any amount over and above that required to maintain capital at the beginning of the period.

(2) Profit is the residual amount that remains after expenses have been deducted from income

Statement (1) Statement (2)

a. false false

b. false true

c. true false

d. true true

20.How should preference shares that are redeemable mandatorily be presented in the

statement of financial position?

a. Noncurrent financial liability

b. Current financial liability

c. Equity

d. Either current or noncurrent financial liability depending on redemption date