When deciding how to set up the system to recognize revenue, it is important to understand the extent of revenue deferral and the subsequent timing of revenue recognition. Which two statements are true when you
consider that recognition depends on the nature of the contingency? (Choose two)
Select all that apply, then click Submit answer.
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Payment-based contingencies do not always require payment before the contingency can be removed and revenue recognized
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Time-based contingencies must not expire before the contingency can be removed and revenue recognized
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Time-based contingencies can expire, but the contingency will have to be removed manually before the revenue is recognized if payment is not due yet
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Pre-billing customer acceptance clauses require the recording of customer acceptance in the feeder system, or its expiration, before importing into Receivables for invoicing. Customer acceptance or its expiration
must occur before the contingency can be removed and the order can be imported into Receivables for invoicing. -
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Post-billing customer acceptance clauses must expire (implicit acceptance), or be manually accepted (explicit acceptance), before the contingency can be removed and revenue recognized.
