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

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Definitions:

Unequal Share

A division of resources, responsibilities, or benefits where the portions are not evenly distributed among parties.

Early Prospects

Initial opportunities or possibilities that arise at the beginning of a process.

Founders

Individuals who establish an organization, business, or movement, often driving its vision, values, and initial growth.

Adversaries

Parties or individuals who are in opposition or conflict with each other, often seen in negotiations or competitive situations.