Slick's Used Cars sells pre-owned cars on the installment basis and carries its own notes because its customers typically cannot qualify for a bank loan. Default rates tend to be high or unpredictable. However, in the event of nonpayment, Slick's can usually repossess the cars without loss. The revenue method Slick would use is the:

Question

Quizplus · Accepted Answer

Given the high or unpredictable default rates and the ability to repossess cars without loss, Slick's Used Cars would likely use either the installment sales method or the cost recovery method to recognize revenue. These methods are more conservative and are used when there's a high degree of uncertainty regarding the collection of payments.

Slick's Used Cars Sells Pre-Owned Cars on the Installment Basis