Asked by Saarthak Sharma on Jun 17, 2024

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To recognize revenue after the time of sale,there must be extreme uncertainty regarding the amount of cash to be collected or

A) there must be substantial future services required whose costs cannot be reasonably estimated.
B) units are heterogeneous.
C) the product is immediately salable at quoted market prices.
D) a formal contract must be signeD.

Future Services

The future work or duties to be performed under the terms of a service contract or agreement.

Extreme Uncertainty

Situations where the variables and risks affecting an outcome cannot be measured or predicted accurately due to insufficient information or understanding.

Cash Collected

This term generally refers to the amount of money a company receives during a specific period, including revenues from sales and other sources.

  • Comprehend the guidelines for acknowledging revenue under accrual and cash frameworks in varied scenarios.
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SA
Sarah AlaimoJun 23, 2024
Final Answer :
A
Explanation :
When there is extreme uncertainty regarding the amount of cash to be collected, revenue recognition must be deferred until the uncertainty is resolved. This typically occurs when there are substantial future services required whose costs cannot be reasonably estimated. In this case, revenue recognition must be delayed until the future services are performed and their costs can be accurately determined.