The Predictability of the Project's Revenue Stream Is Essential in Securing

question 53

Multiple Choice

The predictability of the project's revenue stream is essential in securing project financing. Which of the following is NOT a typical contract provisions that are intended to assure adequate cash flow?

• A) quantity and quality of the project's output
• B) a pricing formula
• C) circumstances that permit changes in the contract
• D) fronting loan

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Definitions:

Variable Costing

An accounting method that only includes variable costs (costs that change with production levels) in product costs.

Absorption Costing

An accounting method that allocates all manufacturing costs, including both fixed and variable costs, to the product, used for external financial reporting and tax purposes.

Contribution Format

A type of income statement format that separates fixed costs from variable costs to highlight the contribution margin.

Income Statement

A financial report that shows a company’s revenues, expenses, and net income over a specific period, illustrating the company’s financial performance.