1. The revenue recognition principle provides that revenue is recognized when : a. it is realized. b. it is realizable c. it is realized or realizable and it is earned.
d. none of these.
2. The percentage-of-completion method must be used when certain conditions exist. Which of the following is not one of those necessary conditions?
a. Estimates of progress toward completion, revenues, and costs are reasonably dependable.
b. The contractor can be expected to perform the contractual obligation c. The buyer can be expected to satisfy some of the obligations under the contract.
d. The contract clearly specifies the enforceable rights of the parties, the consideration to be exchanged, and the manner and terms of settlement.
3. When work to be done and costs to be incurred on a long-term contract can be estimated dependably, which of the following methods of revenue recognition is preferable?
a.
Installment-sales method b.
Percentage-of-completion method c.
Completed-contract method d.
None of these

4. Under the cost-recovery method of revenue recognition, a. income is recognized on a proportionate basis as the cash is received on the sale of the product.
b. income is recognized when the cash received from the sale of the product is greater than the cost of the product.
c. income is recognized immediately.
d. none of these.
5. Harber Co. uses the installment sales method. When an account had a balance of $ 5,600, no further collections could be made and the dining room set was repossessed. At that time, it was estimated that the dining room set could be sold for $ 1,600 as repossessed, or for $ 2,000 if the company spent $ 200 reconditioning it. The gross profit rate on this sale was 70 %. The gain or loss on repossession was a a. $ 3,920 loss.
b. $ 4,000 loss.
c. $ 400 gain.
d. $ 120 gain.