A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery to the warehouse as revenue.

Question

Quizplus · Accepted Answer

The company should not record the delivery to the warehouse as revenue as the product has not yet been sold to the customer. Revenue should only be recognized when the customer takes ownership of the product. The delivery to the warehouse is considered a part of the company's inventory management process and should not be recorded as revenue.

A Company That Ships a Large Quantity of Its Products