This makes Sales Return and Allowances rarely seen in the records and financial statements of a service business. Furthermore, the provision of trade terms is also essential in attracting more customers. Trade terms like 2/15, n/30 makes wholesalers and even retailers buy in bulk and avail of the new products offered for sale. With this, the importance of monitoring sales returns and bad debts are critical to ensure the revenues stay up-to- date and are not affected by fraudulent or dissenting customers. This makes companies like Pearson successfully manage their sales operations and continue to operate on a global scale. Accounts Receivable Management: Pearson PLC Pearson PLC is a multinational learning company headquartered in London, England. The company is known for its business divisions centered on education, publishing, and business information. It is a leading publishing company and is one of the most successful learning businesses in the world. In fact, if you check on some books at a bookstore, most of the books may have been published by Pearson. Because of its multinational base and British foundation, Pearson follows the International Financial Reporting Standards (IFRS) instead of Generally Accepted Accounting Principles (GAAP) of the United States. This is an important distinction since both standards have different terminologies and applications concerning accounts receivable. Historically, all of Pearson's sales are made in credit, so the company must consider the recognition of Sales Return and Allowances, Allowance for Bad Debts, and Bad Debts Expense. These are common accounts for merchandising and manufacturing businesses since goods sold may be returned or payments may go beyond due date. As opposed to merchandising businesses, services rendered are almost impossible to return. This makes Sales Return and Allowances rarely seen in the records and financial statements of a service business. Furthermore, the provision of trade terms is also essential in attracting more customers. Trade terms like 2/15, n/30
This makes Sales Return and Allowances rarely seen in the records and financial statements of a service business. Furthermore, the provision of trade terms is also essential in attracting more customers. Trade terms like 2/15, n/30 makes wholesalers and even retailers buy in bulk and avail of the new products offered for sale. With this, the importance of monitoring sales returns and bad debts are critical to ensure the revenues stay up-to- date and are not affected by fraudulent or dissenting customers. This makes companies like Pearson successfully manage their sales operations and continue to operate on a global scale. Accounts Receivable Management: Pearson PLC Pearson PLC is a multinational learning company headquartered in London, England. The company is known for its business divisions centered on education, publishing, and business information. It is a leading publishing company and is one of the most successful learning businesses in the world. In fact, if you check on some books at a bookstore, most of the books may have been published by Pearson. Because of its multinational base and British foundation, Pearson follows the International Financial Reporting Standards (IFRS) instead of Generally Accepted Accounting Principles (GAAP) of the United States. This is an important distinction since both standards have different terminologies and applications concerning accounts receivable. Historically, all of Pearson's sales are made in credit, so the company must consider the recognition of Sales Return and Allowances, Allowance for Bad Debts, and Bad Debts Expense. These are common accounts for merchandising and manufacturing businesses since goods sold may be returned or payments may go beyond due date. As opposed to merchandising businesses, services rendered are almost impossible to return. This makes Sales Return and Allowances rarely seen in the records and financial statements of a service business. Furthermore, the provision of trade terms is also essential in attracting more customers. Trade terms like 2/15, n/30
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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THIS IS A CASE STUDY ANALYSIS.
Read the instructions and answer these questions:
1. How might the use of trade terms like 2/15, n/30 benefit Pearson’s sales operations?
2. Can you explain the purpose of the Sales Return and Allowances account for Pearson?
3. What role do you think monitoring sales returns and bad debts plays in Pearson’s financial management ?
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