Dictionary of Accounting Terms: deferred gross profit
deferred gross profit
method of installment sales. Any profit not collected is deferred on the balance sheet pending cash collection from the customer. When collections are subsequently made, realized gross profit is increased via a debit to the deferred gross profit account. The deferred gross profit account is a contra account to accounts receivable as follows:
| Accounts Receivable (Cost + Profit) Less: Deferred Gross Profit (Profit) Net Accounts Receivable (Cost) |
