tailieunhanh - Lecture Financial accounting (8/e): Chapter 6 - Robert Libby, Patricia A. Libby, Daniel G. Short

Chapter 6 - Reporting and interpreting sales revenue, receivables, and cash. In this chapter, students will be able to understand: Apply the revenue principle to determine the accepted time to record sales revenue for typical retailers, wholesalers, manufacturers, and service companies; analyze the impact of credit card sales, sales discounts, and sales returns on the amounts reported as net sales; analyze and interpret the gross profit percentage. | Chapter 6 Reporting and Interpreting Sales Revenue, Receivables, and Cash McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash Accounting for net Sales Revenue Goods have been delivered or services have been rendered. Collection is reasonably assured. Price is fixed or determinable. There is persuasive evidence of an arrangement for customer payment. The revenue realization principle requires that revenues be recorded when earned. 6-2 The revenue realization principle requires that revenues be recorded when earned. Revenues are considered to be earned when the following conditions are met: 1. Goods have been delivered or services have been rendered. 2. There is persuasive evidence of an arrangement for customer payment. 3. The price for the goods or services is fixed or determinable. 4. Collection from the customer is reasonably assured. Sales Discounts to Businesses Read as: “Two ten, net thirty” 6-3 When customers purchase on open account, they may be offered a sales discount to encourage early payment. Customers, purchasing on open account, are sometimes offered a sales discount to encourage early payment. The sales discount terms are typically written as this slide shows. This particular discount term would be read as “two ten, net thirty.” The first number represents the discount percentage, 2 percent. The second number represents the discount period, 10 days. The letter “n” stands for the word net, the total sales less any returns. The last number represents the maximum days in the credit period. In this case, if the customer pays within 10 days, then a 2 percent discount may be deducted from the invoice amount. If not, then the net amount is due within 30 days. Sales Returns and Allowances Damaged Merchandise Returned Merchandise Customers have a right to return unsatisfactory or damaged merchandise and receive a refund or an adjustment to their . | Chapter 6 Reporting and Interpreting Sales Revenue, Receivables, and Cash McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash Accounting for net Sales Revenue Goods have been delivered or services have been rendered. Collection is reasonably assured. Price is fixed or determinable. There is persuasive evidence of an arrangement for customer payment. The revenue realization principle requires that revenues be recorded when earned. 6-2 The revenue realization principle requires that revenues be recorded when earned. Revenues are considered to be earned when the following conditions are met: 1. Goods have been delivered or services have been rendered. 2. There is persuasive evidence of an arrangement for customer payment. 3. The price for the goods or services is fixed or determinable. 4. Collection from the customer is reasonably assured. Sales Discounts to Businesses Read .