The installment sale method is one of several ways that revenue is recognized by Generally Accepted Accounting Principles (GAAP). In this method, revenue is recognized only when cash is collected by the company and not when the company makes sales.
For example, Company A can sell some products to Customer C without immediately collecting payment for the goods. Installment sale Revenue is recognized at the point at which it is paid for in cash rather than when the goods are sold.
This method encourages the collection of cash for goods sold over a long period. In this method of sale, the buyer must pay for the purchased goods in installments or through regular agreed payments.
