Refer to the revenue recognition practices of Qwest Communications outlined in Theory in Practice 1.1 (p. 7 of the Scott textbook).

a.Use the concept of relevance to argue that firms should record revenue as earned as early as possible in their operating cycles. Was Qwests revenue recognition policy relevant? Explain.

b.Use the concept of reliability to argue that firms should wait until the significant risks and rewards of ownership are transferred to the buyer, and there is reasonable assurance of collection, before recording revenue. Was Qwests revenue recognition policy reliable? Explain.

c.When is revenue recognized under ideal conditions? Why?