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AICPA CPA-Financial Exam - Topic 3 Question 115 Discussion

According to the FASB conceptual framework, an entity's revenue may result from:
D) A decrease in a liability from primary operations.
A) A decrease in an asset from primary operations.
B) An increase in an asset from incidental transactions.
C) An increase in a liability from incidental transactions.

AICPA CPA-Financial Exam - Topic 3 Question 115 Discussion

Actual exam question for AICPA's CPA-Financial exam
Question #: 115
Topic #: 3
[All CPA-Financial Questions]

According to the FASB conceptual framework, an entity's revenue may result from:

Show Suggested Answer Hide Answer
Suggested Answer: D

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.


by Van at Aug 04, 2025, 08:18 AM

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Albina
7 months ago
A decrease in an asset? That sounds off to me.
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Junita
7 months ago
Wait, can a decrease in a liability really count as revenue?
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Sang
7 months ago
Definitely agree with that!
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Melvin
7 months ago
I thought revenue was only from primary operations.
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Martin
7 months ago
Revenue can come from incidental transactions, right?
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Stanford
8 months ago
I thought revenue was primarily from operations, so I’m leaning towards option A, but I’m not completely confident.
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Sanjuana
8 months ago
I feel like option D sounds familiar, but I can't recall if a decrease in liability is really considered revenue.
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Annice
8 months ago
I remember practicing a question similar to this, and I think it was about how revenue is recognized when an asset increases.
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Salley
8 months ago
I think revenue is usually linked to increases in assets, but I'm not sure if it can come from incidental transactions.
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Kerry
9 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.
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Bette
9 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.
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Glenna
9 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.
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Rosalind
9 months 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.
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Dominga
9 months 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.
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Tambra
10 months ago
I agree with Mila. A decrease in an asset from primary operations seems to be the correct answer here.
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Dominic
10 months ago
Haha, C is just too funny. 'An increase in a liability from incidental transactions'? That's just ridiculous!
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Cora
10 months ago
Hmm, I'm not sure about that. I was thinking it could be B, an increase in an asset from incidental transactions.
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Charlene
9 months ago
C seems off, not really related to revenue in my opinion.
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Olene
9 months ago
I lean towards D. A decrease in liability sounds logical too.
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Janey
9 months ago
I think B makes sense. It's about incidental transactions.
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Thurman
9 months ago
True, but A might be right as well. It's about assets decreasing.
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Kanisha
11 months ago
I agree with Alysa, I also think the answer is C.
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Alysa
11 months ago
I think the answer is C because revenue can result from an increase in a liability from incidental transactions.
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Mila
11 months ago
I think the answer is A. The FASB conceptual framework states that revenue results from a decrease in an asset from primary operations.
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Nettie
10 months ago
I agree, revenue results from a decrease in an asset from primary operations.
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Lashawn
11 months ago
I disagree, I believe the answer is B.
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Tyra
11 months ago
I think the answer is A.
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