Revenue usually is recognized at the point of sale. Under special circumstances, however, bases other than the point of sale are used for the timing of revenue recognition.

Disregarding the special circumstances when bases other than the point of sale are used, discuss the merits of each of the following objections to the sales basis of revenue recognition:

It is not conservative enough because accounts receivable do not represent disposable funds; sales returns and allowances may be made; and collection and bad debt expenses may be incurred in a later period.