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0 pointsstoryinmemo9d ago0 comments

It's got to be one of these:

FOB Shipping Point (or Origin): Responsibility transfers to the buyer as soon as the goods leave the seller's premises. You book it when it leaves your loading dock.

FOB Destination: The seller retains risk and costs until the goods reach the buyer’s location.

The sale doesn't happen until the asset transfer occurs. Before that any cash you get from the sale is balanced by the liability to actually produce the good or refund the money. Or more likely you don't get any cash but can't record the bill as accounts receivable. It's not receivable until the transfer point is crossed.

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gzread9d ago

You can account a transaction that's been placed but not fulfilled. I think when someone orders $15m of goods, you can immediately book $15m accounts receivable (asset) and $15m goods owed (liability) as soon as you have the expectation it will happen. If the transaction falls through, you delete them.

jeremyjh9d ago

Under GAAP you cannot recognize revenue before the service is delivered or product is shipped. You can accrue revenue that is earned but not yet paid (if you are paid on Net 30, for example), but even if pre-paid you have to book that as deferred revenue, which is a liability (until you ship).

vasco9d ago

There's no deleting anything in accounting.

datsci_est_20158d ago

As someone with a partner who’s an accountant, I love seeing technologists be confidently wrong about accounting fundamentals vs. the type of technicalities that she has to deal with. Your comment highlights the absurdity of their confidence; kudos.

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