Under the earnings approach, if a company sells its product but gives the buyer the right to return the product, revenue from the sales transaction should be recognized at the time of sale if
A) the market for returnable goods is untested.
B) there is a transfer of the risks and rewards of ownership.
C) the amount of future returns can be reasonably estimated.
D) the amount of goods returned is likely to be high.

Question

Quizplus · Accepted Answer

Revenue can be recognized at the time of sale if the amount of future returns can be reasonably estimated, as this allows the company to account for potential returns and recognize revenue accordingly.

Under the Earnings Approach, If a Company Sells Its Product