Accounting rule against dobbs practice

Reference no: EM13756080

Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually receives orders for sales approximately one week before shipping inventory to customers. For orders received late in December, Kathy Dobbs, the owners, decides when to ship the goods. If profits are already at an acceptable level, Dobbs delays shipment until January. If profits for the current year are lagging behind expectatioins, Dobbs ships the goods during December.

Under Dobbs FOB policy, when should the company record a sale?
Do you approve or disapprove of Dobbs's manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, identify a better way to decide when to ship goods. Is there an accounting rule against Dobbs's practice?

Reference no: EM13756080

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