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According to the FASB conceptual framework, an entity's revenue may result from:
Suggested Answer: D
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Rule: Revenues are inflows or other enhancements of assets and/or settlements (decreases) in liabilities resulting from the entity's ongoing major operations, not from 'incidental' operations.
Choice 'd' is correct. An entity's revenue may result from a decrease in a liability from primary operations.
27 comments · newest first
AL
Albina
10 months ago
A decrease in an asset? That sounds off to me.
JU
Junita
10 months ago
Wait, can a decrease in a liability really count as revenue?
SA
Sang
10 months ago
Definitely agree with that!
ME
Melvin
10 months ago
I thought revenue was only from primary operations.
MA
Martin
10 months ago
Revenue can come from incidental transactions, right?
ST
Stanford
11 months ago
I thought revenue was primarily from operations, so I’m leaning towards option A, but I’m not completely confident.
SA
Sanjuana
11 months ago
I feel like option D sounds familiar, but I can't recall if a decrease in liability is really considered revenue.
AN
Annice
11 months ago
I remember practicing a question similar to this, and I think it was about how revenue is recognized when an asset increases.
SA
Salley
11 months ago
I think revenue is usually linked to increases in assets, but I'm not sure if it can come from incidental transactions.
KE
Kerry
12 months ago
I've got a good handle on the FASB revenue recognition principles, so I'm feeling confident about this one. I'll carefully read through the options and select the answer that best matches the framework.
BE
Bette
12 months ago
I'm a little confused by the wording of the options. I'll need to review my notes on the FASB conceptual framework to make sure I'm interpreting this correctly. Gotta be careful on these tricky definition-based questions.
GL
Glenna
12 months ago
Okay, let me think this through. Revenue should result from an increase in assets or a decrease in liabilities from the entity's primary operations, not incidental transactions. I believe the correct answer is A.
RO
Rosalind
1 year ago
Hmm, I'm a bit unsure about this one. The options seem similar, and I want to make sure I understand the nuances of the FASB framework before selecting an answer.
DO
Dominga
1 year ago
This seems like a straightforward conceptual question from the FASB framework. I'm pretty confident I can recall the key points about revenue recognition.
TA
Tambra
1 year ago
I agree with Mila. A decrease in an asset from primary operations seems to be the correct answer here.
DO
Dominic
1 year ago
Haha, C is just too funny. 'An increase in a liability from incidental transactions'? That's just ridiculous!
CO
Cora
1 year ago
Hmm, I'm not sure about that. I was thinking it could be B, an increase in an asset from incidental transactions.
CH
Charlene
1 year ago
C seems off, not really related to revenue in my opinion.
OL
Olene
1 year ago
I lean towards D. A decrease in liability sounds logical too.
JA
Janey
1 year ago
I think B makes sense. It's about incidental transactions.
TH
Thurman
1 year ago
True, but A might be right as well. It's about assets decreasing.
KA
Kanisha
1 year ago
I agree with Alysa, I also think the answer is C.
AL
Alysa
1 year ago
I think the answer is C because revenue can result from an increase in a liability from incidental transactions.
MI
Mila
1 year ago
I think the answer is A. The FASB conceptual framework states that revenue results from a decrease in an asset from primary operations.
NE
Nettie
1 year ago
I agree, revenue results from a decrease in an asset from primary operations.
LA
Lashawn
1 year ago
I disagree, I believe the answer is B.
TY
Tyra
1 year ago
I think the answer is A.