Under the Earnings Approach, If a Company Sells Its Product

question 69

Multiple Choice

Under the earnings approach, if a company sells its product but gives the buyer the right to return the product, revenue from the sales transaction should be recognized at the time of sale if

• A) the market for returnable goods is untested.
• B) there is a transfer of the risks and rewards of ownership.
• C) the amount of future returns can be reasonably estimated.
• D) the amount of goods returned is likely to be high.

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