In 2003, FASB and IASB met and established four criteria for establishing revenue recognition. To recognize revenue, which of the following conditions must be present?
In 2003, FASB and IASB met and established four criteria for establishing revenue recognition. To recognize revenue, which of the following conditions must be present?;?;A change in assets has occurred and can be appropriately measured.;?;Payment for the sale must be received prior to recognizing the revenue.;?;The product or deliverable, in the case of a service business, has been received by the customer.;?;A promise to deliver has been established.;2;Failure to provide any care in fulfilling a duty owed to another is called;?;gross negligence;?;constructive fraud;?;breach of contract;?;negligence;3;Which of the following is a fundamental characteristic of the market system?;?;Unselfish behavior;?;Central planning by government;?;Government-set wages and prices;?;Property rights;4;The income effect indicates that;?;consumers should substitute among various products until the marginal utility from the last unit of each product purchased is the same;?;a rise in money income will cause consumers to buy smaller quantities of normal goods;?;when the price of a product falls, a consumer will be able to buy more of it with a specific income;?;when the price of a product falls, the lower price will induce the consumer to buy more of that product now that it is relatively cheaper;5;The price elasticity of demand coefficient measures;?;the slope of the demand curve;?;how far business executives can stretch their fixed costs;?;buyer responsiveness to price changes;?;the extent to which a demand curve shifts as incomes change;6;A normative statement is one that;?;applies only to microeconomics;?;is based on the law of averages;?;is based on value judgments;?;applies to macroeconomics;7;Many conflicts of interest in business contracts can be remedied ethically by which of the following?;?;Deception and disclosure;?;Camouflage and consent;?;Disclosure and consent;?;Conflicts of interest can never be remedied ethically;8;Four professional general standards and responsibilities for Certified Public Accountants are quality control and assurance, professional judgment, competence, and;?;integrity;?;diligence;?;independence;?;knowledge;9;In 2002, Adelphia Cable filed bankruptcy when it was discovered that;?;excess fictitious expenses of $1 million were added to the income statement;?;bank debt in excess of $2.3 billion was not shown on the financial statements;?;assets on the financial statements were considerably undervalued;?;sales in excess of $72 billion were omitted from the financial statements;When budgets are used to measure performance, there is a danger that budgetary slack may occur. This happens when;?;sales budgets are set too high and cost budgets are set too low;?;sales budgets are set too low and cost budgets are set too high;?;sales budgets are set too low and cost budgets are set too low;?;sales budgets are set too high and cost budgets are set too high;11;ABC Company owes XYZ Enterprises $1 million for goods purchased from XYZ over a year ago. XYZ Enterprises continues to list the $1 million in their accounts receivable balance and does not record any allowance for doubtful accounts. XYZ Enterprises is failing to follow;?;SFAS 169;?;Financial Accounting Standards Board FAS 157;?;Financial Accounting Standards Board Statement No. 5;?;SFAS 101;12) The EU Privacy Directive presents problems for the United States in that;?;data may not be transferred to a non-EU entity unless guarantees are provided that equal security measures are in place;?;transferred data may not be translated into another language;?;high transfer charges are required to be paid by the recipient in the currency of the country transferring the data;?;several layers of approval are necessary before any data may be transferred to a non-EU entity;13) When revenue is recognized and shipment has not been made and the criteria for recognizing revenue on bill-and-hold transactions set out in SEC Staff Accounting Bulletin No. 101 have not been met, this is known as;?;timely revenue recognition;?;postrevenue recognition;?;premature revenue recognition;?;conservative revenue recognition;14;According to the Agency Theory, in a corporation there are two types of information consumers known as;?;principals and vendors;?;customers and agents;?;vendors and customers;?;agents and principals;15;Tom Donaldson and Tom Dunfee are proponents of ethical guidelines related to technology that are based on differentiating hypernorms from nonhypernorms. This theory is known as;?;Integrative Social Contracts Theory;?;Transparent Ethical Dilemma Theory;?;Electronic Communications Privacy Theory;?;Social Contract Network Theory;When the economist says that economic wants are insatiable, this means that;?;economic resources?land, labor, capital, and entrepreneurial ability?are scarce;?;these wants are virtually unlimited and therefore incapable of complete satisfaction;?;the structure of consumer demand varies from time to time and from country to country;?;economic resources are valuable only because they can be used to produce consumer goods;17;The pursuit of self-interest;?;is highly detrimental to the market system;?;means the same as selfishness;?;gives direction to the market system;?;is reflected in the behavior of firms, but not in the behavior of consumers;18) The bankruptcy of WorldCom in 2002 was due to the company?s actions in;?;expensing equipment purchases rather than capitalizing these purchases;?;failing to record revenues;?;classifying expenses as assets;?;recording fictitious liabilities;19) Productive efficiency refers to;?;the production of the product-mix most wanted by society;?;production at some point inside of the production possibilities curve;?;the full employment of all available resources;?;the use of the least-cost method of production;20;Agency costs arise when agents fail to act in the best interests of the principals. One example of losses from poor decisions would be;?;purchasing inferior material to earn yearly bonus;?;investing additional funds in profitable projects;?;prioritizing projects, according to the best interests of the corporation;?;increasing the scope of the audit of the financial statements;21) If the price of normal good X rises, the income;?;effect will induce the consumer to buy more of X and the substitution effect will induce him to buy less;?;and substitution effects will both induce the consumer to buy more of X;?;effect will induce the consumer to buy less of X and the substitution will induce him to buy more;?;and substitution effects will both induce the consumer to buy less of X;22) Section 55 of the Principles of Professional Conduct of the AICPA states that;?;members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism;?;a member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities;?;a member should observe the profession?s technical and ethical standards, strive continually to improve competence and quality of services, and discharge professional responsibility to the best of the member?s ability;?;members should perform all professional responsibilities with the highest sense of integrity;23) The concept of economic efficiency is primarily concerned with;?;the limited wants-unlimited resources dilemma;?;the conservation of irreplaceable natural resources;?;considerations of equity in the distribution of wealth;?;obtaining the maximum output from available resources;24;Which of the following is a normative statement?;?;The temperature is high today.;?;It is too hot to play tennis today.;?;It will cool off later this evening.;?;The humidity is high today.;25;Suppose that as the price of Y falls from $2.00 to $1.90 the quantity of Y demanded increases from 110 to 118. Then, the price elasticity of demand is;?;4.00;?;3.94;?;2.09;?;1.37;26) Other things equal, an excise tax on a product will;?;increase its supply;?;increase the quantity sold;?;increase its demand;?;increase its price;27) If a conflict of interest arises prior to entering into a business contract, the parties should;?;cease and desist because all conflicts of interest are irreconcilable;?;determine the type of conflict and if disclosure of the conflict of interest is sufficient to proceed with the contract;?;commence a cooling-off period until the conflict is removed;?;stop negotiations immediately and contact a mediator to negotiate the terms of the contract;28) Assuming an economy has fixed quantities of resources, that economy;?;is able to produce the same amount of output regardless of the production technologies it chooses;?;is able to satisfy all consumer wants;?;is more efficient, the larger the amount of goods and services it produces;?;will produce the same output whether or not resources are used efficiently;29) When evaluating the performance of managers in investment centers, performance metrics should be based on;?;only costs under their control;?;revenues, costs, and investments under their control;?;only investments under their control;?;revenue and costs under their control;30;When applying for a bank loan or trade credit, one way a company can appear to be in a healthier financial position would be to;?;overstate its expenses;?;understate its sales;?;undervalue its assets;?;understate its liabilities
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