Asked by Katie Kaminski on May 14, 2024
Verified
Which of the following is not one of the criteria that must be satisfied for a seller to recognize revenue at the time of sale when the right of return exists?
A) The sales price is known at the time of sale.
B) The buyer's obligation to the seller would not change by theft or damage to the product.
C) The seller has significant obligations to help the buyer sell the product.
D) The seller can reasonably estimate the amount of future returns.
Right of Return
A policy that allows customers to return purchased goods within a specified period if they are not satisfied.
Sales Price
The amount for which a commodity is sold to a customer, excluding tax, shipping, and handling.
- Acquire knowledge about the guidelines for revenue recognition, focusing on situations with rights of return and challenges in collecting revenue.
Verified Answer
SZ
Salsabila ZahirMay 20, 2024
Final Answer :
C
Explanation :
The criteria for recognizing revenue at the time of sale when the right of return exists include that the sales price is known, the buyer's obligation to the seller is fixed, and the seller can reasonably estimate future returns. However, significant obligations to help the buyer sell the product would not be a factor in this determination.
Learning Objectives
- Acquire knowledge about the guidelines for revenue recognition, focusing on situations with rights of return and challenges in collecting revenue.