Could someone explain what is Bill-and-Hold Sales? How it recongzes revenue earlier? Thanks,
richard, the glossary in this year’s LII CFAI Volume II (G-4) describes Bill-and-hold basis as “Sales on a bill-and-hold basis involve selling products but not delivering those products until a later date.” On pages 237-239 of this same volume, CFAI uses Sunbeam as an example for their fiscal 1996-1997. To recognize revenue, there must be assurance of payment and completion of the earnings process. In this case, customers are billed and the seller may have assurance of payment, but the customer is not yet in possession of the products it purchased. Therefore, it seems debatable whether the earnings process is actually complete. Hopefully others can clarify further.