Under the cost recovery method of revenue recognition
A)income is recognized on a proportionate basis as the cash is received from the sale.
B)income is recognized immediately.
C)income is recognized when the cash received from the sale exceeds the cost of the product sold.
D)income is recognized when all of the cash has been receiveD.

Question

Quizplus · Accepted Answer

Under the cost recovery method, income is recognized when the cash received from the sale exceeds the cost of the product sold. This means that the company must recover its costs before recognizing any income from the sale. Therefore, income is recognized on a partial basis and only when the cost of the product has been fully recovered.

Under the Cost Recovery Method of Revenue Recognition