For each of the following situations indicate the audit evidence that should be obtained to determine whether revenue should be recognized or not in the current period. Use the five-steps processes for recognizing revenue to make your determination.

Best Products is a retailer of appliances that offers layaway sales to its customers twice a year. Best retains the merchandise, sets it aside in its inventory, and collects a cash deposit from the customer. The customer signs an installment note at the time the initial deposit is received, but no payments are due until 30 days after delivery.

1. Select which option is correct according to the situation above:

a. Revenue Should be recognized in the current period.

b. Revenue Should be recognized with the passage of time.

c. Revenue Should not be recognized in the current period.

2. Select the correct step from of the 5-step process that should be used to draw your conclusion:

a. Step 1

b. Step 2

c. Step 3

d. Step 4

e. Step 5