If a Company Sells Its Product but Gives the Buyer

question 55

True/False

If a company sells its product but gives the buyer the right to return the product,AASB 118 requires revenue from the sales transaction to be recognised at the time of sale.

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Definitions:

Earnings Manipulation

A practice where managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead stakeholders about the underlying economic performance of a company or to influence contractual outcomes that depend on reported accounting numbers.

Managers

Individuals responsible for controlling or administering all or part of a company or similar organization, making decisions regarding its operations.

Multiple-Element Sales

Transactions that involve the sale of multiple products or services for a single price, requiring allocation of revenue among the different elements.

Revenue Recognition

The accounting rule that identifies the precise circumstances for recognizing or recording revenue.