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Your Accounting Client Operates a Website Through Which It Sells

question 110

Essay

Your accounting client operates a website through which it sells products offered by other companies. You have gathered facts that indicate your client is an order-taker who receives payments from customer-buyers through its website, and then sends the order to the other company so they can ship their product to the customer. You have identified an accounting issue that suggests your client is acting as an agent for the other company which brings into question the way they recognize revenue from the transaction. Briefly describe how you should proceed in resolving this accounting research question.


Definitions:

Wholesale Cost

The cost of goods purchased in large quantities directly from manufacturers or distributors before any markup for retail sale.

Trail Mix

A snack blend that typically consists of a mixture of nuts, seeds, dried fruits, and sometimes chocolate or candy.

Peanuts

Informally, a very small or insignificant amount of money; literally, a legume crop grown mainly for its edible seeds.

Raisins

Dried grapes often used as a snack or cooking and baking ingredient.

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