D is corrent because profit is to be considered realized when a sale in the ordinary course of business is effected. Inventory valuation above cost can only be justified by the following: an inability to determine approximate costs, immediate marketability at a quoted price, and the characteristic of unit interchangeability. Thus, a condition permitting recognition of revenue prior to sale would be an assured sales price.
A is incorrect because, with the installment sales method, revenue recognition is deferred until cash is collected (as a result of the questionability of collection of the sales price).
B is incorrect because a long established management policy of noncompliance with GAAP does not justify noncompliance.
C is incorrect because the concept of internal consistency of amounts of revenue is a nonsense term.
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