When premiums are offered to customers, for example, upon redemption of coupons the entity can usually establish that it has a legal present obligation resulting from a past event and that an outflow of economic benefits is probable. Furthermore, if the entity has prior experience with such offers or information about the experience of similar entities, a reliable estimate of the obligation should be feasible. If no obligating event has occurred, the entity could avoid the future expenditure by its future actions.

The journal entry to accrue revenue requires a debit to a receivable account and a credit to a revenue account. Thus, the accrual of revenue increases assets and equity.

A forward contract is an executory contract in which the parties involved agree to the terms of a purchase and a sale, but performance is deferred. Accordingly, a forward contract involves a commitment today to purchase a product on a specific future date at a price del ermined today.

Explanation/Reference:

Cast-based pricing is a pricing method in which a standard markup or target profit is added to the cast of the product in determining the product's sales price.