COMM 293 Chapter Notes - Chapter 7: Gross Profit, Accounts Receivable, Financial Statement
Document Summary
Chapter seven: reporting and interpreting sales revenue, receivables, and cash. Fob (free on board) shipping point: title changes hands at shipment; buyer normally pays for shipment: revenue recognized at shipment, lots of wholesalers, retailers, manufacturers do this. Fob destination point: title changes hands on delivery, and seller normally pays for shipment: revenue recognized at delivery. Service companies record sales revenue when they provided the service to customers. Companies disclose specific revenue recognition rules in note to their financial statements of significant accounting policies. Sales to consumers cash or credit card. Credit card discount: the fee charged by the credit card company for services. Net sales (on income statement)= sales revenue credit card discount (ie. 3% cc discount = 0. 03*sales revenue) Sales (or cash) discount: a cash discount offered to encourage prompt payment of an account receivable. Credit term 2/10, n/30 means customer may deduct 2% from invoice if cash. Benefits: payment made within 10 days of sale.
