Question:
Distinguish between the installment sales method and the cost recovery method of accounting for
installment sales.
Answer:
The installment sales method recognizes gross profit by applying the gross profit percentage on the sale
to the amount of cash actually received each period. The cost recovery method defers all gross profit
recognition until cash has been received equal to the cost of the item sold.
Distinguish between the installment sales method and the cost recovery method of accounting for
installment sales.
Answer:
The installment sales method recognizes gross profit by applying the gross profit percentage on the sale
to the amount of cash actually received each period. The cost recovery method defers all gross profit
recognition until cash has been received equal to the cost of the item sold.
