Chapter 10

Revenue is realized when a product or service is exchanged for inflows or other enhancement of assets.

• TRUE

• FALSE

Accounting standards require entities to follow a five-step approach for recognizing revenue.

• TRUE

• FALSE

Channel stuffing is an improper practice used to boost sales by inducing distributors to buy more inventory than they can promptly resell.

• TRUE

• FALSE

The return of vendor purchases is a part of the revenue process.

• TRUE

• FALSE

The revenue process affects numerous accounts in the financial statements.

• TRUE

• FALSE

A remittance advice is used to track purchases.

• TRUE

• FALSE

Order entry is the initial function in the revenue cycle.

• TRUE

• FALSE

Credit authorization is used to determine if a customer is able to pay for goods.

• TRUE

• FALSE

A negative confirmation requests that customers respond whether they agree or not with the amount due to the entity stated in the confirmation.

• TRUE

• FALSE

A positive confirmation requests that customers respond whether they agree or not with the amount due to the entity stated in the confirmation.

• TRUE

• FALSE