CAF-6 · Chapter 5 · Question 5 of 15
Skyline Ltd sells 100 units at Rs. 200 each. Customers have a right to return within 30 days. Skyline expects 5 units to be returned. How much revenue should be recognized initially?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 19,000
Explanation
Revenue should be recognized for the amount Skyline expects to be entitled to (95 units x Rs. 200 = Rs. 19,000). The remaining Rs. 1,000 is recognized as a refund liability.
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