Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

A company has satisfied its performance obligation when:

the company has recorded the transaction in its accounting system

the company has received an order from the customer

the customer has made a payment in advance

the promised good or service has been transferred to the customer

Previous problemNext problem

Verified step by step guidance

Understand the concept of 'performance obligation' in financial accounting. A performance obligation is a promise in a contract to deliver a good or service to a customer.

Review the criteria for satisfying a performance obligation. According to accounting standards (e.g., IFRS 15 or ASC 606), a performance obligation is satisfied when control of the promised good or service is transferred to the customer.

Clarify the meaning of 'transfer of control.' This occurs when the customer has the ability to direct the use of the good or service and obtain substantially all of its benefits.

Evaluate the incorrect options: Recording the transaction in the accounting system, receiving an order, or receiving payment in advance do not necessarily indicate that the performance obligation has been satisfied. These are administrative or financial steps, not the transfer of control.

Conclude that the correct answer is: The promised good or service has been transferred to the customer, as this aligns with the definition of satisfying a performance obligation under accounting standards.