Oracle Benefits Cloud 2021 Implementation Essentials — Question 16

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.)

Answer options

• A. Payment-based contingencies do not always require payment before the contingency can be removed and revenue recognized.
• B. 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.
• C. Post-billing customer acceptance clauses must expire (implicit acceptance), or be manually accepted (explicit acceptance), before the contingency can be removed and revenue recognized.
• D. Time-based contingencies must not expire before the contingency can be removed and revenue recognized.
• E. 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.

Correct answer: C, E

Explanation

Statements C and E are correct because they accurately describe the requirements for recognizing revenue in relation to customer acceptance clauses. Option A is incorrect as it implies that payment can sometimes occur after the contingency is lifted, which may not always be the case. Option B is misleading because while time-based contingencies can expire, they do not always require manual removal for revenue recognition. Option D is false because time-based contingencies can indeed expire before recognition occurs.