COMM 293 Chapter 7: Chapter 7 Notes (facc).doc
Document Summary
Accounting for sales revenue: revenue principle: revenues must be recorded when they are earned shipping, fob (free on board) shipping point: title changes hands at shipment and buyer pays for shipping revenues recognized at shipment, fob destination point: title changes hands on delivery and seller pays for shipping revenues recognized at delivery service, record sales revenue when they have provided services to the buyer companies disclose the specific revenue recognition rule they follow in the notes to their financial statements, manufacturers, wholesalers, and retailers recognize revenue at shipment, amount of revenues to record is the cash equivalent sales price, sales to consumers, accepting credit cards: increases customer traffic at stores avoids the cost of providing credit directly to customers, including record keeping and bad debts lowers losses due to bad cheques avoids losses from fraudulent credit card sales faster receipt of its money, downside to accepting credit cards: credit card company takes ~3% fee off each purchase shown as:
