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13 November, 20:01

Which of the following statements is correct? A. If a customer returns a product, sales revenue will be credited. B. A company must accrue for estimated future returns at the end of the period in which the related sales revenue is recognized. C. The performance obligation in a sale of products is generally satisfied when the customer orders the products. D. Sales returns and allowances increase a company's profit.

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  1. 13 November, 20:13
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    The correct answer is B. A company must accrue for estimated future returns at the end of the period in which the related sales revenue is recognized.

    Explanation:

    In finance, a futures contract is a standardized contract between two parties to exchange at a future date, the expiration date, a specific asset in standard quantities and currently agreed price. It is a type of derivative contract.

    Futures contracts are traded in the futures market. The party that agreed to buy the underlying asset in the future, the "buyer" of the contract, is said to take the position in "long"; on the other hand, the "seller" takes the position in "short" and is the party that agrees to sell the asset in the future. This terminology reflects the expectations of the parties - the buyer expects the price of the asset to increase, while the seller wants or expects it to be reduced.

    In many cases, the underlying asset of a futures contract cannot be traditional products - that is, for the financial future the underlying asset may be foreign exchange, financial securities or intangible assets or referred items such as stock indices and interest rates.
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