Bert's Meat Market sells quarters and sides of beef on the installment basis. Losses on receivables are very difficult to predict, and meat products cannot be repossessed. The revenue recognition method used by Bert would be:
A) Point of sale.
B) Installment sales.
C) Cost recovery.
D) Installment sales or cost recovery.

Question

Quizplus · Accepted Answer

Bert's Meat Market is selling on the installment basis, therefore, option A (point of sale) is not appropriate. Since losses on receivables are difficult to predict and the product cannot be repossessed, the revenue recognition method should be either installment sales or cost recovery. Bert could use either method, depending on his preference and expectation of collecting the receivables. Therefore, the best choice is D (installment sales or cost recovery).

Bert's Meat Market Sells Quarters and Sides of Beef on the Installment