Tag Archives | point of sale

Point of Sale (POS) Method

See Also:
Accounting Principles
Percentage of Completion Method
Completed Contract Method
Cost Recovery Method
Installment Method

Point of Sale (POS) Method Definition

The Point of Sale (POS) Method also known as the Revenue Method or Sales Method is one of the many methods under the Revenue Principle of Accounting. This method records the revenue at the point of sale because cash is received on site or it is reasonably certain that cash will be received soon and is thus a finalized transaction. They commonly use this method in grocery stores or other entities such as Wal-Mart. Companies can also record a sale if the amount of revenue can be measured objectively and the receipt is certain which becomes useful for companies such as a mining or lumber company. Another use of the method can be associated with a service that is provided like cable, car services, and certain utilities.

Point of Sale (POS) Method Examples

Incorporate the method of sales in several different ways. We will give various examples to explain the method.

Example 1:

Suppose that Fred goes into a music store to buy a CD. He makes a selection and then pays 15 dollars cash or the price of the CD to the store clerk. The music store would then use the sales method to record Fred’s purchase of the CD. The sales method would then post the following journal entries in recording the sale.

Cash…………………………………$15
Sales Revenue………………………………..$15

COGS………………………………..$10
Inventory……………………………………….$10

Example 2:

Timber Inc. specializes in the cutting and transportation of lumber. The company has recently sent a load of lumber with a costs of $10,000 to Furniture Inc. Since Timber Inc. has already delivered the goods to the customer (Furniture Inc.), Timber Inc. can go ahead and recognize the revenue because it has been objectively measured and there is reasonable certainty that the company will receive cash in the near future. Therefore, record journal entries as follows:

At time of Delivery:

Account Receivable (A/R)………..$10,000
Sales Revenue………………………………..$10,000

Upon Receipt of Cash:

Cash…………………………………..$10,000
A/R………………………………………………..$10,000

Example 3:

Plumber LLC performs plumbing work to households. Recently, they performed services to Brian because his kitchen drain was clogged. To unclog the drain Johnny the Plumber, an employee of Plumber LLC, snaked the piping and fixed the problem in an hour. Plumber Inc. can go ahead and bill Brian for an hour of service provided by Plumber LLC. Since the service has already been performed, the company needs to recognize the revenue under the sales method as follows:

At the time service is performed:

A/R……………………………………..$100
Service Revenue……………………………….$100

Upon the receipt of cash:

Cash…………………………………..$100
A/R………………………………………………….$100

Point of Sale (POS) Method

 

1

Larceny Definition

See Also:
Skimming (fraud)
The Fraud Triangle
Accounting Fraud Prevention using QuickBooks
Audit Scope
Forensic Audit

Larceny Definition

The Larceny definition is the act of stealing cash from a company after it has been recorded on the company books or accounting records. Larceny is often easier to detect because it is on the books, but can often go undetected for a long time.

Meaning of Larceny

Larceny most often occurs at the point of sale or another point of the business where cash is held. It is much easier to detect than skimming and is therefore less common in the business place. However, larceny in business occurs everyday. Because the cash appears within the accounting records, the cash taken should result in an imbalance and alert the company.

Many often overlook larceny because the amounts are usually small and considered immaterial. If the larceny scheme were allowed to continue though, then it could very well add up to material amounts. Best describe this by the saying “death from a thousand cuts.” In other words if a company does not look for the little frauds like larceny then it could definitely push the company into financial trouble. Companies should therefore take note of all the little changes in cash to try and pick up on the scheme as quickly as possible.

Check out our free Internal Analysis whitepaper to assist your leadership decisions and create the roadmap for your company’s success!

Larceny Definition
Strategic CFO Lab Member Extra
Access your Exit Strategy Checklist Execution Plan in SCFO Lab. The step-by-step plan to put together your exit strategy and maximize the amount of value you get.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Larceny Definition

0

Electronic Funds Transfer (EFT)

See Also:
Electronic Data Interchange
Technology Assessment Criteria
How to evaluate IT systems
How Redundant is Your Data Communications Link?
Research and Development

Electronic Funds Transfer (EFT) Definition

Electronic funds transfer (EFT) refers to an electronic financial transaction. According to the U.S. Electronic Fund Transfer Act, an EFT is a non-paper financial transaction initiated via computer, or another electronic terminal, that gives a financial institution authorization to debit or credit an account. And EFT may also be called a wire transfer.

Electronic funds transfer transactions are quicker and more efficient than paper-based funds transfers. They can also eliminate paperwork and needless administrative efforts. Examples of common electronic funds transfer transactions include the following:

EFTPOS Meaning

The EFTPOS acronym stands for electronic funds transfer point of sale. This refers to electronic funds transfers made at point of sale terminals in retail outlets. When the customer uses his or her debit, credit, or charge card at the check out counter, the customer can opt to take out cash using the card. Furthermore, this type of EFT is common in Australia and New Zealand.

electronic funds transfer

0

LEARN THE ART OF THE CFO