A Company That Ships a Large Quantity of Its Products

question 103

True/False

A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery as revenue.

---

Definitions:

Net Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health.

Short-term Bank Loan

A loan borrowed from a bank with a repayment period typically less than one year, often used for immediate liquidity needs.

Fixed Assets

Long-term tangible assets that are used in the operations of a business, such as machinery, buildings, and equipment, and are not expected to be converted into cash in the current or upcoming fiscal year.

Long-term Bank Loan

A loan provided by a banking institution with a repayment period extending beyond one year, typically used for financing significant business investments or acquisitions.