Which one of the following is an example of an aggressive revenue recognition policy?
A)A firm recognizes revenue at time of collection.
B)A firm recognizes revenue at the expiration of the return period.
C)A firm with a liberal return policy recognizes revenue at shipment.
D)A firm with a liberal return policy recognizes revenue at shipment with a corresponding allowance for returns and allowances.

Question

Quizplus · Accepted Answer

A firm with a liberal return policy recognizes revenue at shipment, which is an aggressive revenue recognition policy as it recognizes revenue before the customer has permanently accepted the goods. This may result in higher reported revenues in the short-term, but may also lead to higher returns and allowances in the future.

Which One of the Following Is an Example of an Aggressive