Question

Xerox immediately recognized revenue from long-term leased contracts on copiers, rather than recognizing it over the lease term. This is an example of: a. Conservative revenue recognition b. The matching principle c. Aggressive revenue recognition d. Period costing

Answer 1

Xerox immediately recognized revenue from long-term leased contracts on copiers, rather than recognizing it over the lease term. This is an example of (c) Aggressive revenue recognition

Explanation:

Xerox immediately recognized revenue from long-term leased contracts on copiers, rather than recognizing it over the lease term. The company falsely drive up its stock prices, Xerox defrauded its investors by making them believe that that the financial position of the company was much more than what is being reflected or showed and Xerox were eventually charged and forced to pay a fine in excess of $10 million by the S.E.C

The four condition for recording  up the sale by SEC are

• Persuasive evidence of an arrangement exists
• Delivery has occurred or services have been rendered
• The seller's price to the buyer is fixed or determinable
• Collectibility is reasonably assured