Asked by Football news With Scott and Lucas on May 21, 2024
Verified
Shipments to a company's distributors should normally be treated as sales when they occur.
Shipments
The transportation of goods from one location to another.
Distributors
Entities involved in the process of making products available for consumption by distributing them from producers to end consumers.
- Gain insight into the guidelines for revenue recognition and its effects on financial reporting practices.
Verified Answer
PP
Parth PatelMay 23, 2024
Final Answer :
False
Explanation :
Shipments to distributors should not be treated as sales until the distributors have sold the products to their customers. The company should recognize revenue only when the sale has been completed between the distributor and the end customer. Therefore, shipments to distributors are treated as inventory and not as sales.
Learning Objectives
- Gain insight into the guidelines for revenue recognition and its effects on financial reporting practices.