Under the installment sales method,interest charged by the sellers is
A)immaterial and GAAP allows it to be combined with recognized gross profit.
B)recognized out of the last cash collection of the sale.
C)recorded separately out of the periodic cash proceeds.
D)recognized out of the first cash collection of the sale.

Question

Quizplus · Accepted Answer

Interest charged by the seller is recorded separately from the gross profit on the sale and is recognized as it is earned from the periodic cash proceeds. This ensures accurate reporting of interest income and the gross profit from the sale of goods or services.

Under the Installment Sales Method,interest Charged by the Sellers Is