The finance function and the accounting function look at the sale of product to a customer on credit in different ways. Which of the following best describes that difference?
A)Accounting views the sale as a completed transaction to be recorded as revenue while finance views it as incomplete until the cash is received.
B)Finance views the sale as a completed transaction to be recorded as revenue while accounting views it as incomplete until the cash is received.
C)Accounting is more interested in the cash inflows and outflows than finance.
D)Finance is more interested in reporting the appropriate transactions in the proper time period than accounting.

Question

Quizplus · Accepted Answer

Accounting records the sale as revenue because it has met the revenue recognition criteria. Finance, however, sees the sale as incomplete until the cash is received as it affects the cash flow and liquidity of the company.

The Finance Function and the Accounting Function Look at the Sale