[SpatzST]

My study material says consignment sales are detected by noticing large sales on account and many small periodic cash receipts for the receivables.

I get the large sales part, since the company is recognizing like it sold the unit. What are the small period cash receipts? How do they relate to this?

thanks

AUD 90
REG 82
FAR Feb 2015
BEC July 2015?

[M.O.D.]

They are paying off the large (erroneous) consigned sale in small increments, thus the small cash receipts.

Generally a large invoice would be paid with one large check, not with multiple small payments.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Author]

Replies