ACCT 5315 Module 5 Quiz Questions

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

All of the above

Costco Wholesale Corporation collects annual non-refundable membership fees from customers.

When should Costco recognize revenue for these membership fees?

Evenly over the membership year

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?

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

Question text

The 2019 annual report of Leahy Enterprises included the following disclosure:

During fiscal 2019, the U.S. dollar strengthened relative to the other principal currencies in which we transact business with the exception of the Indian rupee.

 

What effect did these currency fluctuations have on Leahy Enterprises’ 2019 consolidated income statement?

Net profit of the Indian subsidiary will be higher

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:

54 days

Thomas Company receives information that requires the company to increase its expectations of uncollectible accounts receivable.

Which of the following does not occur on the company’s financial statements?

Accounts receivables (gross) is reduced

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:

14.6 times

Cambridge, Inc. reported research and development expense of $9,156 million on its 2019 income statement. This expense included many types of costs.

Which of the following types of costs would not be included in the $9,156 million?

Supplies and inventory related to R&D activities and new-product sales