Credit sale, collection and reported profit
A fictional Swiss business provides a service for CHF 12 000 on credit and, under the exercise assumptions, recognizes the revenue and customer receivable immediately. The customer pays CHF 7 000 before the reporting date and the remainder later. The bookkeeper initially records the first collection as new sales revenue because it appears as an incoming bank movement. Separately, the company receives a CHF 20 000 bank loan. The manager adds every receipt together and calls the total current revenue. No tax, fees or other transactions are included in this simplified case. The task is to separate the economic events, supporting balances and cash movements without treating a useful arithmetic total as proof that every receipt has the same accounting nature.
1. Identify the sales revenue and customer receivable after the first payment.
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Under the supplied recognition assumption, revenue is CHF12 000. Collecting CHF7 000 settles part of the receivable, leaving CHF5 000; it does not create another CHF7 000 of revenue.
2. Explain the loan receipt and the control failure.
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The CHF20 000 receipt creates bank funds and a borrowing liability. Classifying every bank inflow as sales confuses financing, recognition and settlement. Reconcile each receipt to its actual source and previously recorded balances.