What does transaction price mean on the CPA exam?
Transaction price. The consideration an entity expects to be entitled to for transferring goods or services, excluding amounts collected for third parties such as sales tax. Step three of the five-step model; step four allocates it to the performance obligations.
Defined against ASC 606-10-32-2.
Which CPA exam sections use transaction price?
Transaction price appears in the FAR section of the CPA exam.
Other terms defined against ASC 606-10
- contract asset: The right to consideration for goods or services already transferred, where the right still depends on something other than the passage of time.
- contract liability: The obligation to transfer goods or services for which the customer has already paid, or for which payment is unconditionally due.
- performance obligation: A promise in a contract to transfer a distinct good or service.
- revenue recognition: Deciding when a sale becomes revenue.
- variable consideration: Any part of a contract price that is not fixed, such as a bonus, a discount or a refund.
Related terms
- accounts receivable: Amounts customers owe for goods or services already delivered.
- reacquisition price: What it costs to retire debt early, including any call premium.
- consideration: The bargained-for exchange that makes a promise enforceable.
- cash equivalents: Short-term, highly liquid investments readily convertible to known amounts of cash and so near maturity that interest rate changes pose insignificant risk.
- operating segment: A component of a public entity that may recognize revenues and incur expenses, whose operating results the chief operating decision maker reviews to allocate resources and assess performance, and for which discrete financial information is available.
- trust services criteria: The AICPA's control criteria for a SOC 2 engagement, in five categories: security, availability, processing integrity, confidentiality and privacy.