Commercial contract
In one sentenceAn agreement between two or more traders, or between a trader and another party for the purposes of the trade, creating mutual obligations such as sale, supply, construction contracting, and services.
Simply put
The important terms for the accountant: the price and payment method, the delivery date and transfer of ownership and risk, warranties, penalties, advance payments, and retentions. These determine when you recognize revenue and how you measure receivables.
Keep the contract written, signed, and filed with the accounting documents; it is your evidence during audits, tax examinations, and disputes, and it is governed by the laws in force in the Kingdom.
Example
A supply contract states that ownership passes to the buyer on receipt of the goods at its warehouse. The supplier shipped the goods on the last day of the year and they arrived two days later, so the supplier does not record the revenue until the new year.
Don't confuse it with
Goods in transitWho owns goods while they are in transit is determined by the delivery terms written in the commercial contract.