Wiley GAAP 2008

Definitions of Terms

Cost recovery method	The method of accounting for an installment basis sale whereby the gross profit is deferred until all cost of sales has been recovered.
Deferred gross profit	The gross profit from an installment basis sale that will be recognized in future periods.
Gross profit rate	The percentage computed by dividing gross profit by revenue from an installment sale.
Installment method	The method of accounting for a sale whereby gross profit is recognized in each period in which cash from the sale is collected.
Installment sale	A sales transaction for which the sales price is collected through the receipt of periodic payments over an extended period of time.
Net realizable value	The portion of the recorded amount of an asset expected to be realized in cash upon its liquidation in the ordinary course of business.
Realized gross profit	The gross profit recognized in the current period.
Repossessions	Merchandise sold by a seller under an installment arrangement that the seller physically takes back after the buyer defaults on the payments.