Which of the following methods to account for sales is used when a high degree of uncertainty exists related to the collection of receivables?
A) Cost-recovery method.
B) Percentage-of-completion method.
C) Deposit method.
D) Completed-contract method.

Question

Quizplus · Accepted Answer

The Cost-recovery method should be used when a high degree of uncertainty exists related to the collection of receivables. This method only recognizes revenue when the cash received equals or exceeds the cost of the goods or services sold. This is generally used in situations where the collectability of the receivables is in doubt, making it a conservative approach to accounting for sales.

Which of the Following Methods to Account for Sales Is