Deferred gross profit on installment sales is generally treated as a(n)
A) deduction from installment accounts receivable.
B) deduction from installment sales.
C) unearned revenue and classified as a current liability.
D) deduction from gross profit on sales.

Question

Quizplus · Accepted Answer

Deferred gross profit on installment sales is treated as unearned revenue and classified as a current liability on the balance sheet because it represents revenue that has been received but not yet earned. As the customer makes payments, portions of the deferred gross profit are recognized as revenue and removed from the liability account.

Deferred Gross Profit on Installment Sales Is Generally Treated as A(n)