Management and Organizational Studies 3360A/B Chapter 6: Chapter 6

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3360A/B
• Professor: Muhammad Shuja

Document Summary

Understanding the nature of sales transactions from a business perspective. Fundamentals of understanding sales transactions: goods: tangible assets. The amount, nature, and timing of what customer agrees to pay is agreed upon: given up: goods/ services (now or in the future). After the transaction the entity will be in a different position, and future cash flows expected to change significantly the risk that the price of an asset will change is reffered to as price risk. Fob shipping point: title passes at point of shipment. Fob destination: title basses when delivered to customer the contract establishes the substantive terms of the deak, which need to be analyzed when determining if revenue has been earned (including when legal title has passed) Step 1: identifying the contract with customers: contract: an agreement between two or more parties that created enforceable rights or obligations. It is probable that the company will collect the consideration to which it will be entitled.