Quiz Ch 05 – T/F Revenue Recognition Model Step 3
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
Step 3 of the revenue recognition model: seller sets the sale price as the expected amount from the customer.
Step 3 of the revenue recognition model: seller sets the sale price as the expected amount from the customer.
The allowance method requires companies to use a consistent method for estimating the uncollectible-account expense.
Accounts receivable and trade receivables are the two primary types of receivables.
Customers who make large purchases and have good credit and cash flow often receive trade discounts.
Most sales on account follow a standard credit cycle of 30 days.
Accounts receivable, also known as trade receivables, refer to the outstanding payments that a business is owed by its customers for the goods or services provided.
Days’ sales outstanding informs a company of the duration it takes to receive payments on its average receivables level.
The maturity value of a note equals the principal plus accrued interest throughout the note term.
A common sales discount term, such as 2/10, n/30, implies that if the buyer pays the invoice within 2 days, they can receive a 10% discount from the seller.
Unless specified otherwise, interest rates are assumed to be on an annual basis.