00:02
See, first is direct sales of books.
00:11
The accounting treatment for direct sales of books are seems appropriate as the revenue is recognized when the books are sold and the fulfillment cost are charged as marketing expenses as they are incurred.
00:38
This is in line with the matching principles of accounting where expenses are recognized in same period as the revenue they help generate.
00:47
Therefore, i agree with the accounting treatment for direct sales of book.
00:52
Then selling airline tickets online.
01:01
The accounting treatment for selling airline ticket is not appropriate.
01:06
When bolton limited sells a dollar 400 airline ticket, they record all dollar 400 as revenue and deduct the cost of the ticket in cost of goods sold.
01:19
This is incorrect.
01:21
As the company is not selling a physical product that can be held in inventory, instead they are acting as an agent for the airlines and earning a commission on the sales of the ticket.
01:32
Therefore, revenue should be recognized as the commission earned and the cost of goods sold should not be deducted.
01:44
I disagree with the accounting treatment for selling airline tickets online.
01:50
Then bartering transactions.
01:58
The accounting treatment for bartering transaction is not appropriate...