According to the cost recovery method of accounting, gross profit on an installment sale is recognized in income ________ .

According to the cost recovery method of

Multiple choice — select the best answer

AOn the date the final cash collection is received
BIn proportion to the cash collection
CAfter cash collections equal to the cost of sales have been received
DOn the date of the sale

✓ Correct answer: C. After cash collections equal to the cost of sales have been received Installment methods of recognizing revenue are appropriate only when "collection of the sale price is not reasonably assured." Under the cost recovery method, gross profit is deferred and recognized only when the cumulative receipts exceed the cost of the asset sold.

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According to the cost recovery method of accounting, gross profit on an installment sale is recognized in income <code>________</code>.

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