ACCT 2101 Chapter Notes - Chapter 6: Credit History, Income Statement, Revenue Recognition
Document Summary
Revenue recognition principle: companies record revenues when goods/services are given to customers in the full amount expected. Credit card discount: the fee that credit card companies charge businesses. Net sales = sales revenue (from credit cards) - credit card discounts. Credit card discounts = xx% * sales revenue. 10: days in discount period n: net (sales - returns) Get payment quicker, allows you to have money to operate. Decreases chance that business will run out of money before paying. Sales returns and allowances is the account used to accumulate refunds or adjustments to what customers pay. Provides companies with a measure of the quality of the customer service. Net sales = sales revenue - sales returns and allowances. Cost of goods sold for any returns decreases in response. Overall net sales = sales revenue - credit card discounts - sales discounts - All accounts lowering the revenue are contra-revenue accounts. Net sales is the top line on income statement.
