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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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?
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.
Transcribed Image Text: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
Transcribed Image Text: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
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