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Finance & Accounting
Pages 3 (753 words)
Accounting is a wide scope of study and practice within which are various theories.These theories inform the development of different accounting methodologies These accounting methodologies are usually guided by industry oversight bodies
An example of these guidelines are those provided by Accounting Standards Codification (ASC) that has within it two methods to recognize revenue for online retailers. One of these methods is the gross method and the other is the net method. Two online retailers that have been used in the examination of these two methods are Amazon and Overstock. ASC guidelines The ASC guidelines recognize two basic accounting methods in the case where one is recognizing revenues. These are the gross method and the net method. The gross method seeks to recognize the total amount of sales that have been made from which any discounts that occur within the time frame opened for discounts are then recorded. These discounts may be accrued in periods. This is where they have occurred in periods that are greater than two accounting periods and where the likely period of payment is not certain. The net method on the other hand records revenue in terms of the net sales that have been made on the product. In the case where later on the customer decides not to take advantage of any discounts that have been offered then this is recorded as income. Gross method of accounting is one that considers the discounts that may be taken and majorly relies on how good a client is in honoring their obligations to pay. ...
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