Sales Revenues Are Usually Considered Recognized When

question 160

Multiple Choice

Sales revenues are usually considered recognized when

• A) cash is received from credit sales.
• B) an order is received.
• C) goods have been transferred from the seller to the buyer.
• D) adjusting entries are made.

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Definitions:

Accounts Receivable

Represents money owed to a company by its customers for goods or services delivered but not yet paid for.

Bad Debt Expense

The cost associated with accounts receivable that a company is not able to collect from its debtors, recognized as an expense on the income statement.

Net Realizable Value

The estimated selling price of goods, minus the estimated costs of completion and the costs necessary to make the sale, often used in inventory valuation and accounts receivable.

Notes Receivable

Financial claims against debtors documented through promissory notes that promise to pay the amount due with interest.