Accounting for Installment Sales

Question 1

Accounting for installment sales is a ____ method

Answer 1

cash

Question 2

Gross profit (step 1)=

Answer 2

sale - COGS

Question 3

Gross profit % (step 2)=

Answer 3

gross profit / sales

Question 4

earned gross profit (step 3) =

Answer 4

cash collections x gross profit %

Question 5

deferred gross profit (step 4)=

Answer 5

installment receivable x gross profit %

Question 6

Deferred gross profit is a ______ asset

Answer 6

contra

Question 7

Cost recovery method: At the time of sale, the expected profit on the sale is recorded as ____ ____ _____

Answer 7

deferred gross profit

Question 8

Cost recovery method: Cash collections are first applied to the recovery of _____ costs

Answer 8

product

Question 9

Cost recovery method: Collections after all costs have been recovered are recognized as _______

Answer 9

profit

Question 10

Cost recovery method is similar to the ____ _____ method

Answer 10

installment sales

Question 11

Both cost recovery and installment sales may only be used when receivables are collected over an extended period and there is no reasonable bases for ________ their collectibility

Answer 11

estimating