Chapter 6 - Chapter 6 Revenue principle requires that...

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Chapter 6 Revenue principle requires that revenue be recorded when they are earned FOB: free on board FOB shipping point: title changes hands at shipment, and the buyer normally pays for shipping FOB Destination: title changes hands on delivery, and the seller normally pays for shipping Revenues from goods shipped FOB shipping point are normally recognized at shipment Revenues from goods shipped FOB delivery are normally recognized at delivery Reasons to use credit card sales to consumers 1. Increasing customer traffic 2. Avoiding the costs of providing credit directly to customers, including recordkeeping and bad debts 3. Lowering losses due to bad check 4. Avoiding losses from fraudulent credit card sales. ( as long as decker follows the credit card company’s verification procedure , the credit card company e.g. Visa absorbs any losses 5. Receiving money money faster Credit card discount: the fee charged by the credit card company for services Sales discounts to businesses Credit sales on open account 2/10 : discount percentage/ number of days to pay for discount n/30: net(total sales less returns)/ maximum credit period sales discount: cash discount offered to encourage prompt payment of an account receivable amount saved/amount paid= interest for x days interest rate for X days x 365 days/X days= annual interest rate
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Sales returns and allowance: a reduction of sales revenues for returns of or allowances for unsatisfactory goods Reporting Net Sales On the company’s books, credit card discounts, sales discounts, and sales returns and allowances are accounted for separately to allow managers to monitor the costs of credit card use, sales discounts, and returns Sales discounts, credit card discounts, and sales returns and allowances are all contra-
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Chapter 6 - Chapter 6 Revenue principle requires that...

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