GAAP Specifies That for a Seller to Record Revenue at Time

question 58

Multiple Choice

GAAP specifies that for a seller to record revenue at time of sale when right of return exists the following conditions must be met except:

• A)The seller's price to the buyer is substantially fixed or determinable at the date of sale.
• B)The buyer has paid the seller,or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product.
• C)The buyer's obligation to the seller does not change in the event of theft or physical destruction or damage of the product.
• D)The buyer is a special purpose entity established by the seller for the sole purpose of buying and reselling the seller's product.

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Definitions:

Condition

The current state or quality of an item, product, or entity, often used to describe something's appearance, functionality, or working order.

Specialize In Producing

The practice in which individuals, companies, or countries focus on the production of a limited scope of products or services to gain greater degrees of productive efficiency within an overall system.

Trade

The exchange of goods, services, or both between two or more parties, wherein each party benefits from the transaction.

Opportunity Cost

The expense associated with missing out on the second-best choice when deciding or selecting a course of action.