Question

Match each of the following items to each of the steps 1 through 5 in the revenue recognition process.

Group of answer choices

The price for performing a federal tax return is $200 and a state tax return is $100 if contracted separately.

      [ Choose ]            Step 3            Step 5            Step 2            Step 1            Step 4      

Tax Prep Inc. will prepare the year-end federal tax return and state tax return for Customer Y.

      [ Choose ]            Step 3            Step 5            Step 2            Step 1            Step 4      

The total price for the year-end tax preparation is $300.

      [ Choose ]            Step 3            Step 5            Step 2            Step 1            Step 4      

Customer Y enters into an agreement with Tax Prep Inc for Tax Prep Inc. to prepare Customer Y's federal and state tax returns.

      [ Choose ]            Step 3            Step 5            Step 2            Step 1            Step 4      

The federal and state tax returns are completed and approved by Customer Y.

Answer 1

The revenue recognition is a five step model and the items as matched wih their steps are given below:

The price for preparing a federal tax return is $200 and state tax return is $100 if contracted seperately - Step 4

Tax Prep Inc will prepare the year-end ferderal tax return and state tax return for Customer Y - Step 2

The total Price for the year-end tax preparation is $300 - Step 3

Customer Y enters into an agreement with Tax Pre Inc for Tax Pre Inc to prepare Customer Y's federal and state tax returns - Step 1

The federal and state tax returns are completed and approved by customer - Step 5

All these steps has been identified using the accounting principles.The principles will be applied using the five steps given below:

1.Identify the contract(s) with the customer

2.Identify the performance obligations in the contract.

3.Determine the transaction price.

4.Allocate the transaction price to the performance obligations in the contract and,

5.Recognize revenue when or as the entity satisfies the performance obligation.