The SRI company provides substantial services after the time of product sale and this condition introduces uncertainty.Which of the following is true?
A)Under some circumstances the firm recognizes revenue sometime after the sale.
B)Under some circumstances this uncertainty is sufficient to preclude the firm's recognizing revenue at the time of sale.
C)The firm always recognizes revenue at the time of sale.
D)Both choices a and b are true.
E)None of the above is true.

Question

Quizplus · Accepted Answer

Both choices a and b are true. The uncertainty regarding the services provided by SRI after the sale of the product may lead the company to delay recognition of revenue until the services are performed, or it may prevent the recognition of revenue at the time of sale altogether. Therefore, both options a and b can occur depending on the circumstances.

The SRI Company Provides Substantial Services After the Time of Product