Which of the Following Statements Is Incorrect with Respect to Revenue

question 35

Multiple Choice

Which of the following statements is incorrect with respect to revenue recognition of construction contracts?

• A) The percentage-of-completion method is to be applied for fixed price contracts if the recognition criteria are satisfied.
• B) AASB 111 requires individual construction contracts to be accounted for separately and the requirements of the standard to be applied separately to each contract.
• C) The percentage-of-completion method should be used, provided certain conditions are met that enable the outcome of the contract to be reliably estimated.
• D) Percentage-of-completion method requires contract revenue to be matched with progress billings, resulting in the reporting of revenue, expenses and profit which can be attributed to the amount billed to customers.
• E) E: All of the given answers.

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Definitions:

Required Reserve Ratio

The percentage of deposits that banks are legally required to keep on hand as reserves, not loaned out.

Excess Reserves

Excess reserves are the capital reserves held by banks beyond the required minimum, often placed with central banks, earning interest.

Money Supply

The total amount of monetary assets available in an economy at a specific time, which includes cash, coins, and balances held in checking and savings accounts.

Time Deposits

Time deposits are bank deposits with a fixed term or maturity date, where the depositor agrees not to withdraw the funds until that date, typically earning a higher rate of interest.