Which two of the following are true of bill and hold transactions?
A)A customer is billed for goods, but goods are not shipped.
B)The customer must have a sound economic reason for purchasing the goods and asking the seller to continue to hold the goods.
C)The transaction must be initiated by the seller.
D)Accounting principles have very broad criteria for when revenue can be recognized for a bill and hold transaction.

Question

Quizplus · Accepted Answer

A bill and hold transaction occurs when a customer is billed for goods, but the goods are not shipped until a later date. This type of transaction requires specific criteria to be met in order for revenue to be recognized, including a sound economic reason for the transaction, a fixed schedule for delivery, and the goods being segregated and not accessible to the seller. The customer must have a reason for requesting the delay in delivery, such as a lack of storage space or a desire to receive the goods at a specific time. These transactions are typically initiated by the buyer, rather than the seller, and accounting principles have strict criteria for when revenue can be recognized.

Which Two of the Following Are True of Bill and Hold