BU227 Lecture : Chapter 7 Reporting & Interpreting Sales Revenue, Receivables, and Cash
Document Summary
For sellers, the criteria are often met & sales revenue is recorded when title/risks of ownership pass to the buyer. The point when title changes hands is determined by shipping terms in the sales contract. Revenues from goods sold fob (free on board) shipping point are recognized at shipment. Revenues from goods sold fob destination point are recognized at delivery. Service companies record sales revenue when they have provided the service. Companies disclose specific revenue recognition rules in the note to their financial statements. The appropriate amount of revenue to record is the cash equivalent sales price. Sales to consumers are for cash or credit card. A credit card discount is the fee charged by the credit card company for services. Sales discounts to businesses sales/cash discount: cash discount offered to encourage prompt payment of an account receivable credit sales on open account don"t have a formal written promissory note indicating amount owed.
