Accounting when to recognise mail order sales

In accounting, the timing of recognizing mail order sales depends on the specific circumstances and the accounting standards followed. Here are some general guidelines:

1. Revenue Recognition Principle: According to the Revenue Recognition Principle, revenue is recognized when it is earned, regardless of when the cash is received. This means that revenue from mail order sales should be recognized when the goods are shipped or delivered to the customer, not when the payment is received.
2. FASB ASC 606: The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a framework for recognizing revenue from contracts with customers. Under ASC 606, revenue from mail order sales should be recognized when the following conditions are met:
   • The company has a contract with the customer.
   • The company has satisfied its performance obligations.
   • The customer has paid the company (or the company has an unconditional right to payment).
   • The amount of revenue can be measured reliably.
3. GAAP vs. IFRS: Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) have similar requirements for recognizing revenue from mail order sales. However, there may be some differences in the application of these standards.
4. Mail Order Sales: For mail order sales, the company should recognize revenue when the goods are shipped or delivered to the customer, as this is the point at which the company has satisfied its performance obligations.
5. Cash and Accrual Methods: Companies can choose to use either the cash method or the accrual method to recognize revenue from mail order sales. The cash method recognizes revenue when cash is received, while the accrual method recognizes revenue when the goods are shipped or delivered, regardless of when the cash is received.
6. Example: Suppose a company sells a product to a customer through a mail order catalog. The company ships the product on January 15, but the customer doesn't pay until February 28. Under the accrual method, the company would recognize revenue on January 15, when the product was shipped, rather than on February 28, when the payment was received.

In summary, the timing of recognizing mail order sales depends on the specific circumstances and the accounting standards followed. Under ASC 606, revenue should be recognized when the company has satisfied its performance obligations, the customer has paid (or the company has an unconditional right to payment), and the amount of revenue can be measured reliably.