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Wiley GAAP 2008 by Colorado Steven M. Bragg Englewood, Ralph Nach American Express Tax and Business Inc., Barry J. Epstein

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Definitions of Terms

Cost recovery methodThe method of accounting for an installment basis sale whereby the gross profit is deferred until all cost of sales has been recovered.
Deferred gross profitThe gross profit from an installment basis sale that will be recognized in future periods.
Gross profit rateThe percentage computed by dividing gross profit by revenue from an installment sale.
Installment methodThe method of accounting for a sale whereby gross profit is recognized in each period in which cash from the sale is collected.
Installment saleA sales transaction for which the sales price is collected through the receipt of periodic payments over an extended period of time.
Net realizable valueThe 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 profitThe gross profit recognized in the current period.
RepossessionsMerchandise sold by a seller under an installment arrangement that the seller physically takes back after the buyer defaults on the payments.

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