If an Overall Loss Is Projected on a Long-Term Construction

question 6

Multiple Choice

If an overall loss is projected on a long-term construction project, when is it recognized under the percentage of completion method?

• A)In the period it occurred
• B)In the period it was estimated
• C)In the last period of the job
• D)In each period the job is in process

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Definitions:

Accrued Liabilities

Liabilities recorded on a company's balance sheet for expenses that have been incurred but not yet paid, capturing the company's financial obligations at a particular point in time.

Prepaid Expenses

Costs paid in advance for goods or services, which are recorded as assets to be used or recognized as expense over time.

Direct Method

A cash flow statement presentation method that lists the major categories of gross cash receipts and payments.

Accrued Expenses

Expenses that have been incurred but not yet paid, typically recorded at the end of an accounting period.