The Installment Method of Recognizing Revenue Is Not Acceptable for Financial

question 4

Multiple Choice

The installment method of recognizing revenue is not acceptable for financial reporting if

• A)The collectability of the sales price is reasonably assured
• B)The installment period is less than 12 months
• C)The method is applied to only a portion of the total
• D)Collection expenses can be reasonably predicted

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Definitions:

Selective Distribution

Distribution strategy in which a manufacturer selects only a limited number of retailers to distribute its product lines.

Marketing Costs

Expenditures associated with promoting, selling, and distributing a product or service, including advertising, market research, and sales force expenses.

Geographical Region

An area defined by natural or artificial features, political boundaries, or cultural characteristics that distinguish it from surrounding areas.

Limited-Function Merchant Wholesaler

A wholesaler that provides a limited range of services, focusing on specific functions like storage or delivery rather than comprehensive support.