When a sufficient transfer of the risks and benefits of ownership does not exist in a sales transaction, the preferred revenue recognition method is the
A)proportional performance method
B)installment method
C)cost recovery method
D)deposit method

Question

Quizplus · Accepted Answer

When a sufficient transfer of the risks and benefits of ownership does not exist in a sales transaction, the deposit method is preferred for revenue recognition. This method recognizes that the transaction does not yet meet the criteria for revenue recognition, treating payments received as deposits.

When a Sufficient Transfer of the Risks and Benefits of Ownership