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Which of the following items creates complications related to revenue recognition?

Select one:

A.Bonuses tied to sales goals

B.Long-term construction contracts

C.Multiple element sales contracts

D.Consignment goods

E.All of the above

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On its annual income statement, Star Laboratories reported research and development expense of $1,564,200,000. Which of the following statements must be true?

Select one:

a.Star Laboratories spent $1,564,200,000 in cash to develop new products and improve old products.

b.Research and development expense reduced Star Laboratories annual net income by $1,564,200,000.

c.Star Laboratories capitalized at least $1,564,200,000 of research and development costs for the year.

d.The $1,564,200,000 included amortized research and development costs from prior years that were not previously expensed, because Star Laboratories incurs such expenses each year.

e.None of these are correct.

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Byce Inc. and Lewis Corporation are competitors in the computer industry. Following is a table of Total revenue and R&D expenses for both companies.

		Byce Inc.		Lewis Corporation
(in millions)	Year 3	Year 2	Year 1	Year 3	Year 2	Year 1
Total revenue	$237,203	$257,087	$201,075	$93,852	$102,938	$95,516
R&D expenses	11,050	8,874	6,645	13,187	13,251	12,519

Which of the following is true?

Select one:

a.Byce Inc. is the more R&D intensive company of the two.

b.Lewis Corporation is more R&D intensive in Year 3 than in Year 2.

c.Byce Inc. has become less R&D intensive over the three years.

d.Lewis Corporation is less R&D intensive in Year 3 than in Year 2.

e.None of the above

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The income statement of Pratt Inc. reports net sales of $3,749.9 million for the current year. The balance sheet reports accounts receivable, net of $535.3 million at December 31 of the current year and $572.2 million at December 31 of the previous year. The days sales outstanding in the current year are:

Select one:

a.7 days

b.54 days

c.7 days

d.52 days

e.None of these are correct.

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McKinnon Enterprises owns a professional ice hockey team, the Rockford Penguins. The company sells season tickets for its upcoming season and receives $816,000 cash. The season starts January 1, with five home games occurring monthly over the next six months. What is the balance in the company's deferred revenue account at the end of April? (Assume the deferred revenue account had a zero balance on January 1.)

Select one:

a.$272,000

b.$544,000

c.$816,000

d.$408,000

e.None of these are correct.

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Ticketmaster contracts with the producer of Blue Man Group to sell tickets online. Ticketmaster charges each customer a fee of $18 per ticket and receives $44 per ticket from the producer. Ticketmaster does not take control of the ticket inventory. Average ticket price for the event is $210 . How much revenue should Ticketmaster recognize for each Blue Man Group ticket sold?

Select one:

a.$228 because the $166 is cost of goods sold paid to the Blue Man Group producer

b.None of these are correct.

c.$62 because both the fee from the customer and the Blue Man Group producer are earned

d.$210 because the $166 is cost of goods sold paid to the Blue Man Group producer

e.$18 because the $44 from the producer is similar to a negative cost of goods sold

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The year-end financial statements of Rally Company for the current year, report total revenues of $19,829 million, accounts receivable of $1,399 million at the current year-end, and $1,318 million for the prior year-end. The company's accounts receivable turnover for the year is:

Select one:

a.15.4 times

b.14.6 times

c.14.2 times

d.None of these are correct.

e.15.0 times

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In spring of this year, Parmac Engineering Company signed a $192 million contract with the city of Parkersburg, to construct a new city hall. Parmac expects to construct the building within two years and incur expenses of $144 million. The city of Parkersburg paid $48 million when the contract was signed, $96 million within the next six months, and the final $48 million exactly one year from the signing of the contract. Parmac incurred $58 million in costs during the year and the rest in the following year to complete the contract on time. Using the cost-to-cost method how much revenue should Parmac recognize in the current year?

Select one:

a.$86 million

b.$144 million

c.None of these are correct.

d.$77 million

e.$48 million

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The year-end financial statements of Pratt Inc. include the following information in a footnote.

(in millions)	Year 2	Year 1
Allowance for doubtful accounts	$5.8	$7.4
Total accounts and other receivables, net	$389.3	$416.2

What are the company's current gross accounts and other receivables at the end of Year 2?

Select one:

a.None of these are correct.

b.$383.5 million

c.$390.9 million

d.$395.1 million

e.$389.3 million

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The financial statements of Calico Corporation, for the May 31 year-end, included the following information relating to their allowance for doubtful accounts: Balance in allowance at the beginning of the year $360 million, accounts written off during the year of $151 million, balance in allowance at the end of the year $351 million. What did Calico Corporation report as bad debt expense for the year?

Select one:

a.$200 million

b.None of the above

c.$142 million

d.$160 million

e.$209 million