Question

Which would be an example of the bill-and-hold strategy?

-Books are kept open beyond the appropriate time.
-Sell products and hold them, with an agreement to bill customers later.
-Combine restricted fund account with the general fund account.
-Inflate revenues with phony software sales.
-None of the above.

Answer 1

The bill-and-hold strategy is where products are sold and held by the seller, who bills the customer but retains possession until a later date.

Step-by-step explanation:

An example of the bill-and-hold strategy would be to sell products and hold them, with an agreement to bill customers later. This strategy involves a legal agreement where sales transaction is recognized and the seller bills the customer, but the seller retains physical possession of the inventory until a future point in time, often at the request of the customer. Key factors to a legitimate bill-and-hold arrangement include a binding agreement, specific reasoning for the delay in delivery, the product must be ready for use and the seller cannot have further obligations for that inventory.