Where a contract is performed over time, which of the following methods may be used to recognize revenue?

• A.

  An output measure, such as the number of items completed as a proportion of the total output expected.

• B.

  An input measure, such as the costs incurred to date as a proportion of the total costs expected.

• C.

  Either an input method or an output method is acceptable.

• D.

  Revenue can only be recognized when the contract is complete.

Del Rio Travel is a travel agency that arranges flights, hotel bookings, and other vacation services for consumers. One company Del Rio sells tickets for is Mendoza Airlines, which provides flights from Canada and the U.S. to several South American destinations. Del Rio Travel earns a commission on every Mendoza Airlines flight it books.

Which of the following statements regarding the Del Rio Travel-Mendoza Airlines arrangement is/are true?

• A.

  Del Rio Travel is acting as the agent and Mendoza Airlines is the principal in any sales of Mendoza Airline flights made by Del Rio Travel.

• B.

  Mendoza Airlines's performance obligation is to provide air transportation: Del Rio Travel's performance obligation is only to facilitate the sale of the airline ticket to the customer.

• C.

  Del Rio should not record the gross amount received on the sale of the Mendoza flight tickets as revenue, but only the commission it receives on the sale.

• D.

  All of the above.

Which of the following is not a monetary asset or liability?

• A.

  Bonds payable

• B.

  Prepaid expenses

• C.

  Accounts receivable

• D.

  Marketable investments

Applying the percentage of sales method to estimate uncollectible amounts, Ben Davis Enterprise believes 2% of its net credit sales of $400,000 for the year will never be collected. Assuming the opening balance in Allowance for Doubtful Accounts is a $2,000 credit and no write-offs occurred, the ending balance in the Allowance for Doubtful Accounts account will be

• A.

  $10,000

• B.

  $8,000

• C.

  $6,000

• D.

  $0.