Accounting for Installment Sales Flashcards
1
Q
What is Gross Profit equal to under the Installment method of accounting?
A
Sale - Cost of Goods Sold
2
Q
What is Gross Profit percentage equal to under the Installment method of accounting?
A
Gross Profit/ Sales Price
3
Q
What is Earned Gross Profit equal to under the Installment method of accounting?
A
Cash Collected x Gross Profit Percentage
4
Q
What is Deferred Gross Profit equal to under the Installment method of accounting?
A
Installment Receivable x Gross Profit Percentage
5
Q
When Are profits recognized under the cost recovery method?
A
When all costs have been recovered
6
Q
What is the appropriate treatment of expected profit under the cost recovery method?
A
Recorded as deferred gross profit until all costs have been recovered
