A Company That Ships Product to Its Customers in January

question 89

True/False

A company that ships product to its customers in January 20B but records them as revenue in December 20A has not violated the revenue principle because they were manufactured and ready for sale before the accounting year end.

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Definitions:

Redemption

Redemption is the process of repurchasing or retiring a financial instrument, such as bonds or preferred stock, by the issuer before its maturity date.

Premium on Bonds Payable

The amount by which a bond's selling price exceeds its face value, reflecting higher interest earnings for the investor than the market rate.

Conversion

The process of changing assets from one form to another, such as the conversion of raw materials into finished goods.

Mortgage Note Payable

A long-term liability listed on a company's balance sheet representing the borrower's obligation to repay a secured loan, typically used for real estate purchases.