A Firm Uses the Instalment Method of Revenue Recognition on an Item

question 56

Multiple Choice

A firm uses the instalment method of revenue recognition on an item with a cash selling price of $1,000 and cost of $600. During the year of sale, the firm received $250 from the customer. Thereafter, no more cash is received. The firm repossesses the item, worth $500 at that time. The entry to record the repossession includes:

• A) Loss $350
• B) Loss $250
• C) Gain $200
• D) Gain $50

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Definitions:

Crafted Environment

An environment thoughtfully designed and organized to suit specific purposes or activities, often reflecting the values and needs of the people using it.

Uniqueness

The quality of being one of a kind or without an exact equivalent.

Advertising

The activity or practice of creating and disseminating messages designed to promote products, services, or ideas to a target audience.

Savvy Consumerism

The behavior of consumers who are knowledgeable, informed, and judicious about their purchasing decisions, often focusing on value, quality, and impact.