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

Which of the following is considered a performance obligation under the revenue recognition principle?

The recording of depreciation expense

The payment of dividends to shareholders

The collection of accounts receivable

A promise to transfer a good or service to a customer

Previous problemNext problem

Verified step by step guidance

Understand the concept of a performance obligation: Under the revenue recognition principle, a performance obligation is a promise in a contract to transfer a good or service to a customer. It is a key element in determining when and how revenue is recognized.

Analyze the options provided: Evaluate each option to determine whether it represents a promise to transfer a good or service to a customer.

Option 1: The recording of depreciation expense - This is an accounting process to allocate the cost of an asset over its useful life. It does not involve transferring a good or service to a customer, so it is not a performance obligation.

Option 2: The payment of dividends to shareholders - This is a distribution of profits to shareholders and does not involve transferring a good or service to a customer, so it is not a performance obligation.

Option 3: The collection of accounts receivable - This is the process of collecting cash from customers for goods or services already provided. It does not represent a promise to transfer a good or service, so it is not a performance obligation. The correct answer is: A promise to transfer a good or service to a customer, as this directly aligns with the definition of a performance obligation under the revenue recognition principle.