When Rights of Return Exist, or Are Likely to Be

question 104

Multiple Choice

When rights of return exist, or are likely to be accepted, _______.

• A)the firm should simply expense them as incurred
• B)should restrict cash to cover any potential right of return or warranty claim
• C)a reasonable estimate of refunds should be made when revenue is recognized.
• D)a company should consult with other firms in the industry with respect to best practices

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Definitions:

Heuristic

A problem-solving approach that employs a practical method or various shortcuts to produce solutions that are not guaranteed to be optimal, but sufficient for the immediate goals.

Information Retrieval

The process of obtaining relevant information from a collection of resources in response to a specific query or need.

Hill-climbing

A mathematical optimization technique that involves iterative progress toward a solution or goal by incrementally improving from the current state.

Heuristics

Mental shortcuts or rules of thumb that simplify decision-making processes, often leading to quicker but sometimes less accurate judgments.