F2 - Accounting for Installment Sales. Flashcards
1
Q
Gross profit formula
A
Sales - Cost of Goods Sold
2
Q
Gross Profit percentage
A
Gross profit / Sales Price
3
Q
Earned Gross Profit
A
Cash Collections x Gross Profit Percentage
4
Q
Deferred Gross Profit
A
Installment Receivable x Gross profit percentage
5
Q
According to the installment method of accounting, gross profit on an installment sale is recognized in income:
A
In proportion to the cash collection.
6
Q
The cost recovery method is appropriate when
A
There is no reasonable basis for estimating collectibility.
