Write a short paragraph to explain to Ford when Ford should, and should not, record this sales…
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(Learning Objective 2: Applying the revenue and the matching principles) Ford Motor Company sells large fleets of vehicles to auto rental companies, such as Enterprise and Hertz. Suppose Enterprise is negotiating with Ford to purchase 1,000 Explorers. Write a short paragraph to explain to Ford when Ford should, and should not, record this sales revenue and the related expense for cost of goods sold. Mention the accounting principles that provide the basis for your explanation.
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