A company sells goods on credit valued at Rs 25000 to a customer. At what point in the sales cycle should this sale be recognized in the accounts?

When the customer's order is received.

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When the goods are ready for dispatch to the customer.

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When the goods are sent, accepted and invoiced.

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When the customer pays.

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Solution

The correct option is C When the goods are sent, accepted and invoiced.
Sales is completed only when the legal title of the goods passed to the buyer.
In such case, goods sent and accepted by the buyer along with the invoice is considered as point of sale.

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Similar questions

Q. A company sells goods on credit valued at Rs.

25000

to a customer. At what point in the sales cycle should this sale be recognized in the accounts?

Q. When a customer returns goods a statement called " ________" is sent to him. This informs the customer that his account has been credited to the extent of value of the goods returned.

Q. The realization concept determines when goods sent on credit to customers are to be included in the sales figure for the purpose of computing the profit or loss for the accounting period. Which of the following trends to be used in practice to determine when to include a transaction in the sales figure for the period. When the goods have been
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(b) Invoiced
(c) Delivered
(d) Paid for
Give reason for your answer.

The following are the transactions in a company during the year:
1. Sale of goods worth (including profit) Rs 10,00,000 to single customer who did not pay money till the end of the year
2. Cash sales to other customers Rs 24,00,000

What shall be the revenue of the business for this particular year?

Q. Under sales or return on approval basis, when the transactions are few and the customer accepts the goods on approval or return basis, the accounting treatment will be __________________.

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A company sells goods on credit valued at Rs 25000 to a customer. At what point in the sales cycle should this sale be recognized in the accounts?

The correct option is C When the goods are sent, accepted and invoiced.Sales is completed only when the legal title of the goods passed to the buyer. In such case, goods sent and accepted by the buyer along with the invoice is considered as point of sale.

The correct option is C When the goods are sent, accepted and invoiced.
Sales is completed only when the legal title of the goods passed to the buyer.
In such case, goods sent and accepted by the buyer along with the invoice is considered as point of sale.