Under the deposit method
A) the seller recognizes revenue or income on the receipt of cash.
B) a company receives cash from the buyer before it transfers the goods or property.
C) the buyer reports the property as an asset on its balance sheet.
D) the seller has performed on the contract and a legitimate claim exists.

Question

Quizplus · Accepted Answer

Under the deposit method, a company receives cash from the buyer before it transfers the goods or property. The revenue or income recognition occurs when the goods or property are delivered or transferred, rather than when the cash is received. The buyer may report the deposit as a prepaid expense and the seller may report the deposit as a liability until performance on the contract is complete.

Under the Deposit Method