Which of the following methods of revenue recognition would be selected when a vendor has another firm acting as its selling agent?
A)Cost recovery method.
B)Returned goods method.
C)Installment sales method.
D)Consignment sales method.

Question

Quizplus · Accepted Answer

When a vendor has another firm acting as its selling agent, the best method of revenue recognition would be the consignment sales method. Under consignment sales, the vendor retains ownership of the goods until they are sold by the selling agent. The selling agent receives a commission on the sale, and the vendor recognizes revenue only when the goods are actually sold. This method is especially applicable when the vendor does not have control over the sales process, and the selling agent is responsible for marketing and selling the goods.

Which of the Following Methods of Revenue Recognition Would Be