When the Risk of Non-Collection of Installment Payments Is High

question 91

True/False

When the risk of non-collection of installment payments is high or when there is no reasonable basis for estimating the proportion of installment accounts receivable likely to prove uncollectible,both IFRS and U.S.GAAP permit the use of the installment sales method.

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Definitions:

First-In, First-Out Method

An accounting method where the costs of the earliest goods purchased or produced are the first to be expensed.

Equivalent Units

A concept in cost accounting used to apportion costs to units of production in processes where the product is not completed at the end of a period.

Milling Department

A specific section within a manufacturing facility where materials are ground, cut, or otherwise processed through milling operations.

First-In, First-Out Method

This is an inventory valuation method where goods first added to inventory are the first ones to be sold.