Question

In: Accounting

Explain a sound control over revenue recognition in the process of making credit sales for a...

Explain a sound control over revenue recognition in the process of making credit sales for a manufacturing company.

Expert Solution

Control over recognition of credit sales for a manufacturing company :-

1. Any credit sales there must be transfer of title of goods, there should be no cash proceeds received by the seller

2. There should be a Credit agreement between the seller and buyer. This credit agreement may be in form of written or oral.

3. Before recognising a Credit sale, should be some criteria to be fulfilled by the both seller and buyer :-

A. Seller has to transfer the title of goods to the buyer

B. Buyer has to take the ownership and in some circumstances where has to take possession of the goods also.

C. Buyer and seller has to be agreed to a mutual terms and conditions regarding the credit provided by the seller to the buyer.

D. Terms and conditions include mode of payment, time of payment any discounts or interest, any other appropriate terms and conditions.

E. In a credit sale also the seller has to issue invoice when the buyer has to accept the invoice.

F. This accepted invoice will act as an evidence for the the credit sale happened between buyer and seller. if there is any written agreement between the buyer and seller regarding this credit sale then that agreement will also act as an evidence for the credit sale.

If all the above specified activities are done properly by both the seller and buyer then the seller can recognise credit sale.

The management of the the cellular organisation has to verify each and every of the above provided things before recognising a Credit sale.

Proper accounting has to be then regarding a Credit sale which includes creation of a debtor account and recognising the sale.

The verification and maintenance of all the ever provided evidences and process of a credit sale will be the control on recognising of credit sale by a manufacturing company.

These are all the information required to solve the above given question.

if there is any clarification required regarding the above provided answer, please mention them in comment box.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.

ekkarill92 answered 1 year ago

explain a sound control over a public company's process for controlling the appropriateness of the allowance...

explain a sound control over a public company's process for controlling the appropriateness of the allowance for doubtful accounts.

"Revenue Recognition" The revised revenue recognition accounting standard employs a five-step process to achieve the core...

"Revenue Recognition" The revised revenue recognition accounting standard employs a five-step process to achieve the core principle to recognize income upon the transfer of promised goods or services. Use the Internet or Strayer Library to research a company that bundles a product and a service. Examine income recognition of the bundled product and service for the company by addressing each step in the five-step process for revenue recognition. Give your opinion on the most critical step for accurately reporting revenue...

Revenue recognition at a point in time or over time Kleymenova Consulting, Inc., enters into a...

Revenue recognition at a point in time or over time Kleymenova Consulting, Inc., enters into a contract to provide consulting services 1. The consulting services are the provision of technical computer assistance as needed. For $25,000 per month, whenever the client has a problem, it contacts Kleymenova, which dispatches a consultant to address the problem at no additional charge. 2. The consulting services are to develop a new customer payment collection system for the client. The $300,000 contract price is...

1. Explain Revenue Recognition methods (percentage of completion, completed production, traditional, installment) 2. Explain Expense Recognition...

1. Explain Revenue Recognition methods (percentage of completion, completed production, traditional, installment) 2. Explain Expense Recognition methods (cause & effect, rational & systematic, immediate recognition) 3. Describe Fair value hierarchy: Level 1 - observable (quoted prices), Level 2 (prices of similar items observable), Level 3 (non-observable – must base value on assumptions) 4. Identify the four basic assumptions of accounting: Economic entity, monetary unit, periodicity, and going concern 5. Recognize the two fundamental qualitative characteristics of financial reporting: Relevance and...

Explain in details the various methods of delayed or advanced revenue recognition lisited below: -Revenue Recognized...

Explain in details the various methods of delayed or advanced revenue recognition lisited below: -Revenue Recognized during the Production Process -Revenue Recognized at the Completion of Production -Revenue Recognized as Services Are Performed -Revenue Recognized as Cash Is Received -Revenue Recognized on the Occurrence of Some Event

Which is NOT included in the five-step process of revenue recognition? Select one: a. Allocate price...

Which is NOT included in the five-step process of revenue recognition? Select one: a. Allocate price to performance obligation b. Identify performance obligation c. Recognize revenue when performance obligation is probable d. Identify contract with customer

list and explain in details the various methods of delayed or advanced revenue recognition.

Explain the revenue and expense recognition principles with an example. Within this respect, explain aslo why...

Explain the revenue and expense recognition principles with an example. Within this respect, explain aslo why unearned revenues cannot be revenues but liabilities.

Explain the revenue and expense recognition principles with an example. Within this respect, explain also why...

Explain the revenue and expense recognition principles with an example. Within this respect, explain also why unearned revenues cannot be revenues but liabilities.

The revised revenue recognition accounting standard employs a five-step process to achieve the core principle to...

The revised revenue recognition accounting standard employs a five-step process to achieve the core principle to recognize income upon the transfer of promised goods or services. Use the Internet to research a company that bundles a product and a service. Examine income recognition of the bundled product and service for the company by addressing each step in the five-step process for revenue recognition. Give your opinion on the most critical step for accurately reporting revenue in the five-step process. Provide...