In the context of installment sales, the Gross Profit Ratio is the proportion of gross profit (gain) to the contract price, used to determine the taxable gain from periodic receipts from the buyer.
An installment sale is a sales arrangement where the buyer agrees to make payments over time rather than paying the full amount upfront. This type of sale is commonly used in real estate transactions and for higher-priced goods or services.
Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.