Shipments to a company's distributors should normally be treated as sales when they occur.

Question

Quizplus · Accepted Answer

Shipments to distributors should not be treated as sales until the distributors have sold the products to their customers. The company should recognize revenue only when the sale has been completed between the distributor and the end customer. Therefore, shipments to distributors are treated as inventory and not as sales.

Shipments to a Company's Distributors Should Normally Be Treated as Sales