Revenue Collection Cycle

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Chapter 07 - The Revenue and Collection Cycle Chapter 07 The Revenue and Collection Cycle Multiple Choice Questions 1. To be recognized, revenues must also be realized or realizable and A. Foreseeable B. Collected C. Earned D. Shipped 2. The SEC requires all of the following for revenue to be recognized except A. Cash is collected. B. Persuasive evidence of an arrangement exists. C. Delivery has occurred or services have been rendered. D. The seller's price to the buyer is fixed or determinable. 3. "Bill and Hold" refers to an arrangement where A. Sales are recorded but are not shipped. B. Sales are shipped but are not recorded. C. Sales are billed but not collected. D. Inventory is held but not billed. 4. Custody of inventory…show more content…
To be recognized, revenues must also be realized or realizable and A. Foreseeable B. Collected C. Earned D. Shipped Original AACSB: Analytic AICPA BB: Legal AICPA FN: Research Bloom's: Knowledge Difficulty: Easy 2. The SEC requires all of the following for revenue to be recognized except A. Cash is collected. B. Persuasive evidence of an arrangement exists. C. Delivery has occurred or services have been rendered. D. The seller's price to the buyer is fixed or determinable. Original AACSB: Analytic AICPA BB: Legal AICPA FN: Research Bloom's: Knowledge Difficulty: Medium 7-27 Chapter 07 - The Revenue and Collection Cycle 3. "Bill and Hold" refers to an arrangement where A. Sales are recorded but are not shipped. B. Sales are shipped but are not recorded. C. Sales are billed but not collected. D. Inventory is held but not billed. Original AACSB: Analytic AICPA BB: Legal AICPA FN: Research Bloom's: Knowledge Difficulty: Hard 4. Custody of inventory is transferred to the shipping area upon authorization of: A. The customer order. B. The shipping order. C. The invoice. D. The purchase order.…show more content…
Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded? A. The billing department supervisor sends copies of approved sales orders to the credit department for comparison to authorized credit limits and current customer account balances. B. The accounting department supervisor independently reconciles the accounts receivable subsidiary ledger to the accounts receivable control account monthly. C. The accounting department supervisor controls the mailing of monthly statements to customers and investigates any differences reported by customers. D. The billing department supervisor matches prenumbered shipping documents with entries in the sales journal. AICPA AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Risk Analysis Bloom's: Application Difficulty: Hard 32. Which of the following internal control activities most likely would assure that all billed sales are correctly posted to the accounts receivable ledger? A. Daily sales summaries are compared to daily postings to the accounts receivable ledger. B. Each sales invoice is supported by a prenumbered shipping document. C. The accounts receivable ledger is reconciled daily to the control account in the general ledger. D. Each shipment on credit is supported by a prenumbered sales invoice.

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