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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Definitions:

Psychoanalytic Thought

A body of theories first developed by Sigmund Freud that emphasizes the influence of the unconscious mind on behavior, the importance of childhood experiences, and the roles of conflict between conscious and unconscious forces.

Libido

In psychoanalytic theory, a term used to describe sexual desire or the driving force behind all human behavior according to Freud.

Compromise Formation

In modern psychoanalytic thought, the main job of the ego, which is to find a compromise among the different structures of the mind and the many different things the individual wants all at the same time. What the individual actually thinks and does is the result of this compromise.

Ego

In psychoanalytic theory, the part of the human personality that is rational, reality-oriented, and operates according to the principle of seeking pleasure and avoiding pain.