Suppose a company sells a product, prepares an invoice for the customer (debiting accounts receivable and crediting sales, and then sends the invoice to the customer. Suppose further that the company does not send the product to the customer until payment is received. When does the company recogize revenue?
I maintain that if payment is reasonable assured, revenue is recognized at point of sale (when the invoice is generated) and that the delivery terms (the item is sent to the client after payment is received) does not even enter the equation. Is this correct? Thanks.
Sara