Which of the following is not an example of an agency arrangement where the selling entity would recognise revenue on a net basis?
A) A retailer selling goods to a customer for $88 and remitting $8 GST to the government.
B) A travel agent selling a cruise ticket to a customer, charging the customer $2 000 and remitting $1 800 to the cruise liner company.
C) A licensed hotel selling keno tickets to customers for $5.00 and remitting $4.50 per ticket to the state gaming authority.
D) A distributor receiving stock from its supplier on a sale-or-return basis. The sales price per unit is $100 and the cost per unit is $60.

Question

Quizplus · Accepted Answer

Option D is not an example of an agency arrangement as the distributor is not selling on behalf of any other party. Instead, it is purchasing stock on a sale-or-return basis from its supplier and will recognize revenue when the goods are sold to a third party. Options A, B, and C are all examples of agency arrangements where the selling entity recognizes revenue on a net basis after deducting the amounts remitted to the relevant authorities or suppliers.

Which of the Following Is Not an Example of an Agency