Question
A large manufacturer of cosmetics sells merchandise to a retailer, which in turn sells the goods to the public at large through its chain of
A large manufacturer of cosmetics sells merchandise to a retailer, which in turn sells the goods to the public at large through its chain of retail outlets. The retailer purchases merchandise from the manufacturer under a consignment contract. When should revenue from the sale of merchandise to the retailer be recognized by the manufacturer?
CHOICES:
a. It will depend on the terms of payment (i.e. cash or credit)
b. When goods are sold by the retailer.
c. It will depend on the terms of delivery of the merchandise (i.e. CIF cost, insurance and freight or FOB).
d. When goods are delivered to the retailer.
*Kindly provide an explanation as well. Thanks!
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