The Installment Method of Recognizing Revenue

question 47

Multiple Choice

The installment method of recognizing revenue

• A) should be used only in cases in which no reasonable basis exists for estimating the collectibility of receivables.
• B) is not a generally accepted accounting principle under any circumstances.
• C) should be used for book purposes only if it is used for tax purposes.
• D) is an acceptable alternative accounting principle for a firm that makes installment sales.

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Definitions:

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Warranty

A guarantee given to the purchaser of an item by the seller, promising repair or replacement in case of defects within a certain period of time.

Codicil

A supplement or addition made to alter, explain, or otherwise modify a will, without revoking it entirely.

Working Sprinkler System

A fully operational fire suppression system installed in buildings that activates automatically in response to detectable signs of fire, such as heat or smoke.