Installment sales Flashcards
1
Q
Methods of recognizing revenue
A
Accrual installment, Cost recovery method
2
Q
Accrual method
A
Use when collection is reasonably assured
Degree of collectible is estimable
Profit is recognized and earned when reliazable
Normal GAAP
3
Q
Installment sales approach
A
Collection is not reasonably assured
Profit is recognized as collected
4
Q
Cost recovery method
A
We cannot estimated collectable methods
Collection is not reasonably assured
No profit recognized until entire cost is collected
5
Q
Gross profit recognized
A
Cash collected x Gross profit%=Profit recognized
Deferred GP=Receivable balancexGp=Deferred GP
