A seller is using the cost-recovery method for a sale. Interest will be earned on the future payments. Which of the following statements is not correct?
A) After all costs have been recovered, any additional cash collections are included in income.
B) Interest revenue may be recognized before all costs have been recovered.
C) The deferred gross profit is offset against the related receivable on the balance sheet.
D) Subsequent income statements report the gross profit as a separate item of revenue when it is recognized as earned.
Correct Answer:
Verified
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