A Contractor Bidding on a Fixed-Price Project Must Develop

question 13

Multiple Choice

A contractor bidding on a fixed-price project must develop

• A) accurate and complete cost estimates and include sufficient contingency costs.
• B) a well-defined project with low risk.
• C) techniques to control costs and reduce expenses to make a larger profit.
• D) techniques to determine the cost-at-completion with actual expenditures.

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Definitions:

Temporary Accounts

Accounts used to record transactions for only a single accounting period, which are then reset or closed at the period's end, such as revenues, expenses, and dividends.

Supplies

Items used in the operation of a business that are not directly related to the production of goods or services, such as office supplies.

Prepaid Expenses

Payments made in advance for goods or services that will be received in the future.

Retained Earnings

The portion of a company's profits that is not distributed to shareholders as dividends but is instead reinvested in the business or held as a reserve.