Under which of the following circumstances is the installment sales method appropriate for the recognition of revenue in the income statement?
A) For any sales where collection is spread over a reasonable long period of time.
B) In any situation where management wishes to delay the recognition of revenue in order to smooth its income.
C) For sales where collection is spread over a reasonable long period of time and significant doubt exists about the ultimate collection of the receivables.
D) For sales where collection is spread over a reasonable long period of time and no significant doubt exists concerning ultimate collection of the receivables.

Question

Quizplus · Accepted Answer

The installment sales method is appropriate for recognizing revenue when collection is spread over a long period and there is significant doubt about the ultimate collection of receivables. This method allows revenue and cost recognition to occur as cash is collected, which is suitable under conditions of high uncertainty regarding collectability.

Under Which of the Following Circumstances Is the Installment Sales