Why is cash recieed from distributers considered as asset?



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HOW CAN THE CASH RECIEVED BY COMPANY FROM DISTRIBUTER EFFECT DIRECTLY THE ASSETS ,IT SHOULD EFFECT THE REVENUE RIGHT?

1 Answer(s)


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That depends.
If the company is receiving advance payment from the distributor for a product that will be sold only later, then that cash is not revenue immediately. That cash will become revenue only when that corresponding product is actually sold. Until then it will sit in the balance sheet.