Under the Percentage of Completion Method,gross Income Is Reported

question 36

Multiple Choice

Under the percentage of completion method,gross income is reported

• A)when the contract is completed.
• B)using a percentage that is determined by dividing current year costs by the expected total revenue.
• C)based on the portion of work that is incomplete.
• D)based on the portion of work that has been completed.

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Definitions:

Posting Closing Entries

The process of transferring the balances of temporary accounts to permanent accounts at the end of an accounting period to prepare the books for the next period.

Financial Statements

Reports that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.

Real Accounts

Also known as permanent accounts, these include assets, liabilities, and equity accounts which are not closed at the end of the accounting period and their balances are carried forward.

Owner's Capital

The total value of all assets contributed by the owner to a business minus any withdrawals, representing the owner's equity in the company.