The method of revenue recognition where the seller collects part of the selling price in cash and at the same time recognizes as expenses each period the same portion of the cost of goods or services sold as the portion of total revenues recognized is called the direct payment method.

Question

Quizplus · Accepted Answer

The method described in the statement is actually the installment method, not the direct payment method. The direct payment method involves recognizing revenue only when cash is received from customers, regardless of when the sale occurred.

The Method of Revenue Recognition Where the Seller Collects Part