Question

1. Initial franchise fee revenue should be recognized when all material services or conditions relating to the sale have been substantially performed by the franchisor.

True or False

2. Under ASC Topic 606 for revenue recognition, a performance obligation is considered satisfied when control over the goods and services is transferred to the customer. Which of the following is not an indicator that control has transferred?

a. All of these are indicators that control has transferred.

b. The customer is legally obligated to pay for the goods or services.

c. The customer has legal title of the goods.

d. The customer has accepted the goods and has physical possession of the goods.

3. Balance sheets prepared in compliance with U.S. GAAP reflect a mixture of:

a. current value and discounted future cash flows.

b. discounted cash flows and future values.

c. historical cost and future cash values.

d. historical cost, fair value, net realizable value, and discounted present values.

4. The balance sheet provides information on all of the following except:

a. the market price of the company’s stock.

b. where the money came from.

c. how management invested its money.

d. assessing rates of return.

5. Current liabilities are reported on the balance sheet at:

a. future value.

b. historical cost.

c. discounted present value.

d. current market value.

6. Joe Carie, head accountant, is using the indirect method and the account balance from the balance sheet and income statement to prepare a statement of cash flows. Joe would use an increase in Accumulated Depreciation to:

a. increase cash flow from operating activities.

b. decrease cash flow from investing activities.

c. decrease cash flow from operating activities.

d. increase cash flow from investing activities.

Answer 1

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1. Initial franchise fee revenue should be recognized when all material services or conditions relating to the sale have been substantially performed by the franchisor.: True.

2.

Under ASC Topic 606 for revenue recognition, a performance obligation is considered satisfied when control over the goods and services is transferred to the customer. Which of the following is not an indicator that control has transferred?

a. All of these are indicators that control has transferred.

3.

3. Balance sheets prepared in compliance with U.S. GAAP reflect a mixture of:

d. historical cost, fair value, net realizable value, and discounted present values.

4.

The balance sheet provides information on all of the following except:

a. the market price of the company’s stock.

5.

Current liabilities are reported on the balance sheet at:

b. historical cost.

6.

Joe Carie, head accountant, is using the indirect method and the account balance from the balance sheet and income statement to prepare a statement of cash flows. Joe would use an increase in Accumulated Depreciation to:

a. increase cash flow from operating activities