When Using the Percentage-Of-Completion Method to Account for a Long-Term

question 107

Multiple Choice

When using the percentage-of-completion method to account for a long-term contract, the percentage used to recognize gross profit in the first year is determined by dividing ________.

• A) costs incurred in the first year by estimated total costs of the project
• B) costs incurred in the first year by estimated remaining costs of the project
• C) costs in the first year by contract price
• D) estimated total profit by contract price

---

Definitions:

Federal Government Revenue

The income the federal government receives from taxes, fees, and earnings from its investments, used to fund public services and obligations.

Corporate Income Taxes

Taxes imposed on the income of corporations, which are calculated based on the profits these firms generate.

Property Taxes

Taxes levied by local governments based on the value of real estate property owned by individuals or businesses.

Payroll Taxes

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff.