Answer
On account of installment sales, the chances of not collecting might be high because of the nature of collection terms. The sale itself, therefore, doesn’t give a precise premise on which to gauge the amount of money that will be collected. It is essential to adopt a premise which will provide an accurate estimate.
Work Step by Step
The installment sales technique is a modified cash basis; income is recognized as money is collected. A cash basis is best when no prior estimate of revenue is adequately accurate.
