Ch 6 - Ch 6 Reporting and Interpreting Sales Revenue,...

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Ch 6 Reporting and Interpreting Sales Revenue, Accounts Receivable and Cash A. Revenue Recognition Principle 1. Revenues are reported when they are earned . 2. An exchange has taken place, the earnings process is complete or nearly complete, and collection is probable . 3. Merchandising companies normally records sales revenue when goods are transferred to the buyer. 4. Service companies usually recognize revenue when services are performed . 5. Revenue recognition rules used by a company should be disclosed in the Notes , and should be applied consistently. B. Shipping terms 1. FOB Destination – the title changes hands on delivery, and the seller normally pays for shipping. 2. FOB Shipping Point – the title changes hands at the shipping point, and the buyer normally pays for shipping. C. Reporting Net Sales Sales - Sales Returns and Allowances - Sales Discounts (if a contra revenue) - Credit Card Discount (if a contra revenue) Net Sales II. D.
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Ch 6 - Ch 6 Reporting and Interpreting Sales Revenue,...

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