Sale On Approval Definition
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FAQ
(b) a ?sale or return? if the goods are delivered primarily for resale. (2) Goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.
Businessmen will often employ many tactics to boost their sales. One such tactic is when they sell goods on approval or return basis. This means the customer can keep the goods if he likes them or simply return them to the seller.
Usually, when the goods are sold to the customer, they are immediately treated as sales and the revenue is recognized. However, when the goods are sold on approval or return basis the accounting treatment is different. The sale is recorded only when the goods are approved by the buyer.
Usually, when the goods are sold to the customer, they are immediately treated as sales and the revenue is recognized. However, when the goods are sold on approval or return basis the accounting treatment is different. The sale is recorded only when the goods are approved by the buyer.
A transaction (usually involving goods) in which the buyer is permitted to use goods for a period, and then return them if they do not meet the buyer's needs or expectation, even though the goods are not defective.