Sample Essay

The statement of accounting standard extracts information from Statement of Position – SOP 75-1 of the American Institute of Chartered Public Accountants. The criteria set out by Statement 48 for recognizing revenues where is as follows.

  1. The price offered by the seller to the customer should be fixed at the date of sale.
  2. The buyer has made payment to the seller or is obligated to pay the seller and the obligation is unconditional on resale of product.
  3. The obligation of payment by the customer would not change in case of physical damage or theft of the product.
  4. There is economic benefit to the buyer who is buying the product for resale apart from the benefit provided by the seller.
  5. There is no obligation on the seller’s part to ensure the resale of the product to the buyer  (FASB, 1981).

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