ACC 201 - Chapter 6 Notes Accounting for sales revenue o...

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Chapter 6 Notes Accounting for sales revenue o Revenue principal= requires revenues to be recorded when they are earned (delivery has occurred or services have been rendered, there is a persuasive evidence of an arrangement for customer payment, the price is fixed or determinable, and collection is reasonably assured). o When goods are shipped FOB (free on board) the title changes hands at shipment. The buyer normally pays for shipping. Revenues recognized at shipment o When good are shipped FOB destination, the title changes hands on delivery and the seller normally pays for shipping. Revenues recognized at delivery o Service companies most often record sales revenue when they have provided services to the buyer Companies disclose the revenue recognition rule they follow in the footnote to the financial statement entitled summary of significant accounting policies. o The proper amount of revenue to record is the cash equivalent sales price Credit card sales to customers o Why use credit cards? Increasing customer traffic Avoiding the costs of providing credit directly to customers Lowering losses due to bad checks Avoiding losses from fraudulent credit card sales Faster receipt of its money ( company receives money faster) o Credit card discount is 3%. It charges the company this. o Most sales to businesses are credit sales on an open account: that is, there is no formal written promissory note or credit card. o
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This note was uploaded on 01/18/2012 for the course ACC 201 taught by Professor Bokmier during the Summer '10 term at Michigan State University.

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ACC 201 - Chapter 6 Notes Accounting for sales revenue o...

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