Under the installment sales method, a. Gross profit is deferred proportionately to cash uncollected from sale of the product, but total revenue and costs are recognized at the point of sale. b. Revenues and costs are recognized proportionately to the cash received from the sale of the product, but gross profit is deferred until all cash is received. c. Revenue, costs, and gross profit are recognized proportionately to the cash that is received from the sale of the product. d. Gross profit is not recognized until the amount of cash received exceeds the cost of the item sold.
Under the installment sales method, a. Gross profit is deferred proportionately to cash uncollected from sale of the product, but total revenue and costs are recognized at the point of sale. b. Revenues and costs are recognized proportionately to the cash received from the sale of the product, but gross profit is deferred until all cash is received. c. Revenue, costs, and gross profit are recognized proportionately to the cash that is received from the sale of the product. d. Gross profit is not recognized until the amount of cash received exceeds the cost of the item sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Under the installment sales method,
a. Gross profit is deferred proportionately to cash uncollected from sale of the product, but total revenue and costs are recognized at the point of sale.
b. Revenues and costs are recognized proportionately to the cash received from the sale of the product, but gross profit is deferred until all cash is received.
c. Revenue, costs, and gross profit are recognized proportionately to the cash that is received from the sale of the product.
d. Gross profit is not recognized until the amount of cash received exceeds the cost of the item sold.
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