DB Inc. sells goods on a variety of terms to its customers, such as some sales on credit, some on consignment, and some on an installment basis. Which of the following revenue recognition methods is most applicable for a company like DB?
A)Installment sales method, if the credit risk is low.
B)Installment method, if credit risk is high.
C)At time of shipment to the consignee, for consignment sales.
D)At the point of sale, if credit risk is very high.

Question

Quizplus · Accepted Answer

The installment method is used when there is high credit risk, allowing revenue recognition as cash is collected.

DB Inc Sells Goods on a Variety of Terms to Its