When Partial Billings Exceeds Construction in Progress, Under the Completed-Contract

question 5

Multiple Choice

When Partial Billings exceeds Construction in Progress, under the completed-contract method the two accounts are reported together on the balance sheet in the

• A)current assets section
• B)long-term assets section
• C)current liabilities section
• D)long-term liabilities section

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Definitions:

Negative Economic Profits

A situation where a firm's total revenues are less than the total costs, including both explicit and implicit costs, leading to losses.

Accounting Profit

The total revenue of a business minus the explicit costs, representing the financial gain shown in the income statement.

Implicit Costs

The opportunity costs that arise from using assets, resources, or funds to undertake an action instead of another activity, not directly recorded in financial statements.

Explicit Costs

Direct monetary expenses incurred in the course of doing business, such as wages, rent, and materials.