A Sale Should Not Be Recognized as Revenue by the Seller

question 106

Multiple Choice

A sale should not be recognized as revenue by the seller at the time of sale if

• A) payment was made by check.
• B) the selling price is less than the normal selling price.
• C) the buyer has a right to return the product and the amount of future returns cannot be reasonably estimated.
• D) None of these answers are correct.

---

Definitions:

Finance Company

A business that provides loans to individuals or organizations, making profits from the interest charged on these loans.

Receivables

Money owed to a company by its clients or customers for goods or services provided on credit.

Floor Planning

A method used in retail and wholesale to finance inventory, where a loan covers the cost of goods held in stock until they are sold.

High-Priced Inventory

Inventory items that have a significant cost per unit, often requiring specialized handling or more secured storage due to their value.