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...
Related questions
Topic Video
Question
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 |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT