GAAP specifies that for a seller to record revenue at time of sale when right of return exists the following conditions must be met except:
A)The seller's price to the buyer is substantially fixed or determinable at the date of sale.
B)The buyer has paid the seller,or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product.
C)The buyer's obligation to the seller changes in the event of theft or physical destruction or damage of the product.
D)The amount of future returns can be reasonably estimateD.

Question

Quizplus · Accepted Answer

According to GAAP, revenue cannot be recorded at the time of sale if the buyer's obligation to the seller changes in the event of theft, physical destruction, or damage of the product. This means that the seller cannot recognize revenue until it is certain that the buyer has an obligation to pay for the product, regardless of any potential future returns. The other options (A, B, and D) are all conditions that must be met in order to recognize revenue at the time of sale when a right of return exists.

GAAP Specifies That for a Seller to Record Revenue at Time