Gamestop Corp. said the following about its gift card sales in its most recent (2019) annual report: “We establish a liability upon the issuance of merchandise credits and the sale of gift cards. Revenue is subsequently recognized when the credits and gift cards are redeemed.” When Gamestop sells a gift card to a customer, what is the impact on Gamestop’s financial statements? Cash increases and the Income Statement increases Cash increases and Inventory decreases Cash increases and Liabilities increase Cash decreases and the Income Statement decreases No effect because the customer has not yet used the gift card
Gamestop Corp. said the following about its gift card sales in its most recent (2019) annual report: “We establish a liability upon the issuance of merchandise credits and the sale of gift cards. Revenue is subsequently recognized when the credits and gift cards are redeemed.” When Gamestop sells a gift card to a customer, what is the impact on Gamestop’s financial statements? Cash increases and the Income Statement increases Cash increases and Inventory decreases Cash increases and Liabilities increase Cash decreases and the Income Statement decreases No effect because the customer has not yet used the gift card
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 10EB: Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts...
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Gamestop Corp. said the following about its gift card sales in its most recent (2019) annual report:
“We establish a liability upon the issuance of merchandise credits and the sale of gift cards. Revenue is subsequently recognized when the credits and gift cards are redeemed.”
When Gamestop sells a gift card to a customer, what is the impact on Gamestop’s financial statements?
|
Cash increases and the Income Statement increases |
||
|
Cash increases and Inventory decreases |
||
|
Cash increases and Liabilities increase |
||
|
Cash decreases and the Income Statement decreases |
||
|
No effect because the customer has not yet used the gift card |
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