A sale should NOT be recognized as revenue by the seller at the time of sale if:
A) payment was made by cheque.
B) the selling price is less than the normal selling price.
C) the buyer has a right to return the product and the amount of future returns cannot be reasonably estimated.
D) the goods are sold on credit.

Question

Quizplus · Accepted Answer

If the buyer has a right to return the product and the amount of future returns cannot be reasonably estimated, the sale should not be recognized as revenue until the return period has expired or the estimate can be made. This is because there is uncertainty about the ultimate collection of revenue and the seller needs to be cautious in recognizing revenue until the situation is clearer. The other options (A, B, and D) do not necessarily preclude recognition of revenue at the time of sale, although they may have some impact on the seller's risk or timing of receiving payment.

A Sale Should NOT Be Recognized as Revenue by the Seller