BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Record the sale as a receipt
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Record the sale as revenue
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Put the amount of money to be paid on your cashflow statement
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Start depreciation the car for one year
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Detailed explanation-1: -Revenues are recorded or recognized when they are earned regardless of when cash payment is received from the customer. Cash received for selling services or products is a timing issue, and cash for revenue can be received from customers at three different times.
Detailed explanation-2: -Say Company A releases a new version in January, and the new version costs $10, 000 upfront. If a customer purchases and receives the software in January, the company can book the sale and recognize all $10k of the revenue in the same month. This is the simplest example of revenue recognition.
Detailed explanation-3: -Revenue is the entire income a company generates from its core operations before any expenses are subtracted from the calculation. Sales are the proceeds a company generates from selling goods or services to its customers.