Werribee Direct Ltd Is a Mail Order Company That Allows

question 21

Multiple Choice

Werribee Direct Ltd is a mail order company that allows its customers to order on-line and return the goods without obligations.Werribee Direct Ltd had experienced a high ratio of returned merchandise from on-line sales.What is the appropriate accounting treatment for this sale that is in accordance with AASB 118 "Revenue"?

• A) Record the sale only when the option to return has expired;
• B) Record the sale and reduce this by an estimate of future returns;
• C) Record the sale and account for returns as they occur;
• D) Record the sale as deferred revenue and recognise revenue progressively until expiry of the privileges;
• E) E: All of the given answers.

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Definitions:

Intolerance of Criticism

A defensive and negative reaction to feedback or criticism, marked by refusal to accept or consider it constructively.

Grandiose Sense

An inflated sense of self-importance or superiority over others.

Dogmatism

The tendency to lay down principles as incontrovertibly true, without consideration of evidence or the opinions of others.

Cooperate

The act of working or acting together for a common purpose or benefit.