When a company sells a product, and receives its payments in installments over time, it should recognize the revenue at the time of sale unless there are major uncertainties regarding the amount of money it will ultimately collect.

Question

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Revenue recognition principles generally allow for revenue to be recognized at the point of sale, even if payments are received over time, as long as the collection of payment is reasonably assured. Uncertainties about collection can affect the timing of revenue recognition.

When a Company Sells a Product, and Receives Its Payments