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Do you recognize revenue when the sale occurs or when

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Question - The following scenario is a common example for public companies in regards to the GAAP principle for revenue recognition:

You own a small clothing store and offer your customers cash, credit card, gift cards, or in-house credit payment options. Many of your customers choose to pay with a credit card or charge the purchase to their in-house credit accounts. This means that your store is owed money in the future from either the customer or the credit card company, depending on the payment method. Regardless of credit payment method, your company must decide when to recognize revenue. Answer the following questions with sufficient detail that your meaning and answer is clear:

-Do you recognize revenue when the sale occurs or when a cash payment is received?

-When do you recognize the expenses associated with the sale?

-How are these transactions recognized?

Reference no: EM133105650

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