Hello.

I noticed in Chegg's textbook solutions section for Financial and Managerial Accounting for MBA's 4th edition, chapter 5 question 51 is missing an answer. Will you please solve question 51 in chapter 5 please.

MA5-51

Ethics and Governance: Revenue Recognition

GAAP offers latitude in determining when revenue is earned. Assume that a company that normally required acceptance by its customers prior to recording revenue as earned, delivers a product to a customer near the end of the quarter. The company believes that customer acceptance is assured, but cannot obtain it prior to quarter-end. Recording the revenue would assure making its numbers: for the quarter. Although formal acceptance is not obtained, the salesperson records the sale, fully intending to obtain written acceptance as soon as possible.

a. What are the revenue recognition requirements in this case?

b. What are the ethical issues relating to this sale?

c. Assume you are on the board of directors of this company. What safeguards can you put in place to provide assurance that the companys revenue recognition policy is followed?

Thanks!