The method of revenue recognition where the seller has substantial uncertainty about the amount of cash it will collect and matches the costs of generating revenues dollar for dollar with cash receipts until the seller recovers all such costs is called the
A)cash basis method.
B)percentage-of-payment method.
C)installment method.
D)cost-recovery-first method.
E)cost-recovery-last method.

Question

Quizplus · Accepted Answer

The method described is the cost-recovery method, specifically the cost-recovery-first method. This method is used when there is substantial uncertainty about the collectibility of the receivable, and revenue is not recognized until all costs have been recovered.

The Method of Revenue Recognition Where the Seller Has Substantial