Premature revenue recognition is the recognition of revenue before accounting standard requirements for recording revenue have been met.An example of this is:
A) a 'bill-and-hold' sale.
B) creating fictitious customers.
C) adjusting sales returns.
D) lapping.

Question

Quizplus · Accepted Answer

'Bill-and-hold' sales involve shipping products to customers but not recognizing revenue until a later date, often when the customer takes ownership of the product or signs a acceptance certificate. If the requirements for a legitimate bill-and-hold sale have not been met, recognizing revenue prematurely can be a violation of accounting standards. The other options (creating fictitious customers, adjusting sales returns, and lapping) are all examples of fraudulent or manipulative accounting practices but do not necessarily involve premature revenue recognition.

Premature Revenue Recognition Is the Recognition of Revenue Before Accounting