Under what condition is it proper to recognize revenues prior to the sale of the merchandise?
A)When the ultimate sale of the goods is at an assured sales price
B)When the revenue is to be reported as an installment sale
C)When the concept of internal consistency of amounts of revenue)must be complied with
D)When management has a long-established policy to do so

Question

Quizplus · Accepted Answer

Revenue can be recognized prior to the sale of merchandise only when the ultimate sale of the goods is at an assured sales price. In such cases, the revenue is considered earned and the company can recognize it before the sale is actually made. This is typically the case with certain types of contracts, such as long-term construction contracts or government contracts. In all other cases, revenue should be recognized only when the sale of the merchandise has been completed.

Under What Condition Is It Proper to Recognize Revenues Prior