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You Are an Accounting Major Who Recently Completed Your Masters

Question 83

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You are an accounting major who recently completed your masters degree in accounting and began working in public accounting as of September 1,2014.Your younger sister currently is enrolled in a principles of accounting course.Your sister calls you at your firm's offices one day to congratulate you on the purchase of your new stereo system for your apartment.In the course of the conversation,your sister tells you that her accounting instructor discussed the installment sales method of recognition in class recently.Since your sister knows that you are paying for the stereo by making monthly payments,your sister (in an attempt to impress with her new-found knowledge)begins to describe the process for accounting under the installment sales method of revenue recognition.Your sister finds it particularly curious that the store that sold you the stereo system will be deferring revenue on the sale until cash is collected.
Required:
How would you respond to your younger sister's comments?

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The installment sales method is used onl...

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