Which of the Following Is Not a Difference Between the Percentage-Of

question 72

Multiple Choice

Which of the following is not a difference between the percentage-of completion and completed-contract methods of accounting for long-term construction contracts?

• A) They report different amounts for inventory during the construction period.
• B) They report different amounts for progress billings during the construction period.
• C) They cause a different cash inflow during the construction period.
• D) They report different amounts for accounts receivable during the construction period.

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Definitions:

Significant Influence

Refers to the power to participate in the financial and operating policy decisions of another entity, without having full control over it.

Common Stock

It represents shares of ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profits or losses.

Operating Cycle

The operating cycle is the duration of time it takes for a company to purchase inventory, sell it to customers, and collect the cash from the sales, reflecting how quickly a company can convert its products into cash.