U.S.GAAP does not allow sellers of merchandise to recognize revenue from sales when the customers have the right to return goods.
A)unless the firm can reasonably estimate the amount of returns.
B)unless the firm uses an allowance method to do so.
C)unless the firm can reasonably estimate the amount of returns and uses an allowance method to do so.
D)none of the above.
E)all of the above.

Question

Quizplus · Accepted Answer

According to U.S.GAAP, revenue from sales cannot be recognized when customers have the right to return goods, unless the firm can reasonably estimate the amount of returns and uses an allowance method to do so. Therefore, choice C is the correct answer.

USGAAP Does Not Allow Sellers of Merchandise to Recognize Revenue