Hewlett Packard generates revenue by selling products directly to customers or to distributors. The policies adapted by Hewlett Packard in recognizing revenues are as follows.
- The company recognizes revenues only when there is a fixed price of sold goods and all obligations on part of the company have been completed.
- Revenues related to uncertainties of customer acceptance are recognized when all issues are resolved and there are no refunds or returns to customers are outstanding.
- There is high certainty that revenues will eventually be collected.
- The cost from after sales obligation is accrued.
- The revenues from hardware sales are decreased to cater for estimated returns by customers.
- The only revenue recognized on delivery elements is limited to amounts that have no contingency related to future delivery and return and refund privileges of customers.
- Revenues are recognized when distributors, retailers and other value added providers have economic benefit other than that provided by Hewlett Packard (Hewlett Packard, 2008).
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