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Question

Documenti Microsoft Word erences Mailings Review View dentexam/boardquery/boardquery js.cfm?studentkey- 15558528gsimid Internet Explorer tudentexam/boardquery/boardquery js.cfm?studentKey-1555852&kgsimid-C595598; simid- cOMPxm c d-8 NUIER Comp-XM Exam Points: 10 ©2006 Capsim Management Simulations, Inc in the Month of March, Baldwin received orders of 97 units at a price of $15 00 for their product Beetile. Baldwin uses the accrual method of accounting and offers 30 day credit terms. Baldwin delivers 97 units in April. They received payment for 49 units in March, and 49 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands) Select 1 Save Answer 0.51.455 $728$728 $1,455 . 0 0, S728

Explanation / Answer

The question is related to revenue recognition.

Revenue from sale of goods is to be recognised in the revenue statement when sale is effected.

Sale is said to be effected, when property in goods passes to the buyer along with risks and rewards associated to such goods.

Property of goods in this case is passed in the month of April, when the goods are delivered to the buyer.

Hence, the sale is effected in month of April.

The receipt of amount does not bear importance in determining the sale.

Thus, the answer is Option 1: March - $0; April - $ 1,455

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