- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 2. Analyzing Income Statements
- Subject 1. Revenue Recognition
CFA Practice Question
According to IFRS, which of the following is one of the conditions that must be met for revenue recognition to occur?
B. Payment has been partially received.
C. Goods have been delivered to the customer.
A. Costs can be reliably measured.
B. Payment has been partially received.
C. Goods have been delivered to the customer.
Correct Answer: A
The IASB's conditions that must be met include that the costs incurred can be reliably measured, there is assurance of payment (not necessarily an actual receipt of any payment), and that the significant risks and rewards of ownership have been transferred, which is normally (but not always) when the goods have been delivered.
User Contributed Comments 3
| User | Comment |
|---|---|
| choas69 | in the LOS it stated to recognize revenue; 1- completion of earning process. 2- assurance of payment. can someone explain why the correct answer is A. |
| ashish100 | ............ |
| Daood12 | What i think is , option C is incorrect because , revenue is recognized when Seller bears no risks and rewards of ownership, and this not necessarily means the goods are transferred , they can destroy as well. Option B is incorrect because , revenue is recognized when economic benefits associated with transaction become probable to flow to the seller , without considering partial, full or any payment at all. Option A is correct because , revenue is recognized when costs incurred or to be incurred in respect of transaction can be measured reliably. |