COMMERCE 3AC3- Midterm Exam Guide - Comprehensive Notes for the exam ( 18 pages long!)
11 Oct 2017
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Cash crunch and therefore plans to go to bank bank will assess creditworthiness and will lend based on value of inventory and receivables. The higher the inventory and receivables, the higher the loan. As bookkeeper, you will want to provide franklyn with the impact of choices in the financial statements. Franklyn will want to put his best foot forward to the bank to maximize his chances of getting the loan. Issue: recognition of revenues under new sales promotion. Possession and legal title pass at time of delivery therefore, risks and rewards pass. Measurable = selling price of the inventory. May consider discounting selling price and recognizing part of selling price as income from financing. Since no cash down, no real risk to the customer. They do not have a vested interest in the merchandise. Collectibility may be an issue since a credit check will be done a year before the customer actually starts to pay.
