The Completed-Contract Method (As Opposed to the Percentage-Of-Completion Method) of Accounting

question 14

Multiple Choice

The completed-contract method (as opposed to the percentage-of-completion method) of accounting for revenue from long-term construction contracts should be used in which of the following circumstances?

• A) The contractor has been in business for many years and has completed many contracts in the past.
• B) The contracts are of a relatively long duration.
• C) Reasonable accurate estimates of the degree of completion can be made based on past experience.
• D) Reasonably accurate estimates of the degree of completion cannot be made due to the lack of experience with similar types of contracts.

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