Question

Which of the following statements is correct? Revenue is recognized at the time of shipment when goods are shipped FOB destination. Sales returns and allowances are reported as operating expenses on an income statement. A seller records revenue when title and risks of ownership transfer to the buyer. Sales discounts are reported as cost of sales on an income statement.

Answer 1

Answer:

The correct answer to the following question will be Option C.

Explanation:

• The buyers, as well as sellers, must negotiate an understanding as to who is capable of paying certain transport costs and also who, whenever the item is delivered, assumes the default risk throughout transportation.
• A seller reports compensation whenever the purchaser has the transition of titles as well as ownership uncertainties.

The other three options are not related to a certain scenario. So that option C is the right answer.