The installment method of income recognition is an application of the wherewithal to pay concept.

Question

Quizplus · Accepted Answer

The installment method of income recognition, which allows revenue and profit to be recognized as cash is received from sales, aligns with the wherewithal to pay concept by recognizing income only when the financial capacity (wherewithal) to pay taxes on that income is established through actual receipt of cash.

The Installment Method of Income Recognition Is an Application of the Wherewithal