Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Exercises - Page 75: E2-10d

Answer

This entry is inappropriate because it fails to recognize earned revenue, in opposition to the revenue recognition criteria.

Work Step by Step

The revenue recognition criteria hold that revenue should be recognized only when it is (1) realized or (2) realizable. This entry fails to recognize revenue that has been realized through the sale.
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