Under the installment-sales method,
A) revenue, costs, and gross profit are recognized proportionate to the cash that is received from the sale of the product.
B) gross profit is deferred proportionate to cash uncollected from sale of the product, but total revenues and costs are recognized at the point of sale.
C) gross profit is not recognized until the amount of cash received exceeds the cost of the item sold.
D) revenues and costs are recognized proportionate to the cash received from the sale of the product, but gross profit is deferred until all cash is received.

Question

Quizplus · Accepted Answer

Under the installment-sales method, gross profit is deferred proportionate to cash uncollected from sale of the product, but total revenues and costs are recognized at the point of sale. This means that revenue and costs are recognized at the time of sale, but gross profit is recognized gradually as cash is collected from the customer over time.

Under the Installment-Sales Method