Which of the following is TRUE when goods are sold on on an installment basis?
A)Revenue is recognized at time of the initial sale.
B)Cost of goods sold is debited for the cost of the merchandise sold.
C)Revenue is not recognized until all monies due under the contract have been collected.
D)The deferred gross profit liability is debited as cash is collected.

Question

Quizplus · Accepted Answer

In installment sales, revenue is recognized as cash is collected, and the deferred gross profit liability is reduced (debited) as each installment payment is received.

Which of the Following Is TRUE When Goods Are Sold