All of the following situations contribute to the need for a company to recognize deferred revenues,except for A)partially executed contracts between buyers and sellers. B)the requirement by sellers for the prepayment of goods and services. C)mutually unexecuted contracts between buyers and sellers. D)the seller has collected a deposit but has an outstanding performance obligation under the contract.

Question

Quizplus · Accepted Answer

Mutually unexecuted contracts between buyers and sellers do not contribute to the need for a company to recognize deferred revenues because there is no exchange of goods or services and therefore no revenue has been earned or deferred. The other three situations all reflect a transfer of goods or services but require deferred revenue recognition because there are outstanding obligations or payments still due.

All of the Following Situations Contribute to the Need for a Company