On November 20, Routledge Publishing Prints 4,000 Copies of an Accounting

question 6

Multiple Choice

On November 20, Routledge Publishing prints 4,000 copies of an accounting textbook. In December, Routledge Publishing ships 1,000 copies to various bookstores, who have the right to return the books if they can't sell them within three months. Historically, the bookstores typically return 4% of the books. Under GAAP, what is the correct accounting for these events?

• A) Routledge should record revenues related to 4,000 books in November, when it prints them.
• B) Routledge should record revenues in December for 1,000 books, and an allowance for sales returns of 4% of the sales.
• C) Routledge should record revenues in December for 1,000 books, and wait until later to record any sales returns.
• D) Routledge should wait until after the three-month return period before recording any revenues.

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Definitions:

Competence

The ability to do something successfully or efficiently, often relating to a specific skill or knowledge set.

Intrinsic Motivation

The drive to engage in activities for their own sake, for the satisfaction and pleasure derived from the activity itself, rather than for some external reward.

Extrinsic Motivation

Motivation that is driven by external rewards such as money, fame, grades, or praise, in contrast to intrinsic motivation, which is driven by personal satisfaction or interest.

Extrinsic Motivation

Encouragement stemming from external factors including wealth, recognition, scores, and compliments.