Final answer:
The statement about the cost-recovery method is true, as it requires revenue recognition only after the cash received exceeds the costs of merchandise sold. This method ensures that profit is not overstated when there is high uncertainty of cash collection.
Step-by-step explanation:
Under the cost-recovery method, a company recognizes no revenue or profit until cash payments by the buyer exceed the cost of the merchandise sold. This statement is True. The cost-recovery method is a conservative accounting approach used to recognize revenue and profits. It is particularly relevant when there's a high uncertainty regarding the collection of cash. Under this method, total revenue and total cost need to be considered diligently. Firms aim to make a profit, which is the difference between total revenue and total cost. In accounting, this can be seen as two different concepts: accounting profit, which is total revenue minus explicit costs, and economic profit, which also includes implicit costs.