When using the installment sales method,
A) total revenues and costs are recognized at the point of sale,but gross profit is deferred in proportion to the cash that is uncollected from the sale.
B) gross profit is recognized only after the amount of cash collected exceeds the cost of the item sold.
C) revenue,costs,and gross profit are recognized proportionally as the cash is received from the sale of product.
D) gross profit is deferred until all cash is received,but revenues and costs are recognized in proportion to the cash collected from the sale.

Question

Quizplus · Accepted Answer

The installment sales method recognizes total revenues and costs at the point of sale, but defers gross profit in proportion to the cash that is uncollected from the sale. This means that the gross profit is recognized gradually as the cash is received from the customer.

When Using the Installment Sales Method