A retailer is paid cash by its customers but pays its suppliers very regularly but no sooner than 60 days of receipt of their invoice.Monthly sales hold steady at 100 units at 5 CU each.The cost of the merchandise is 3 CU per unit.The firm has been in existence for 100 years.By how much will the amount of cash received from customers in January X1 differ from the amount of sales revenue recognized in that month? The retailer closes it books on 30 June each year.

Question

Quizplus · Accepted Answer

The amount of cash received from customers in January X1 will not differ from the amount of sales revenue recognized in that month because the retailer is paid cash by its customers, meaning sales revenue and cash received match at the time of sale.

A Retailer Is Paid Cash by Its Customers but Pays