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

question 66

Multiple Choice

If an overall loss is projected on a long-term construction project, when is it recognized under the completed contract 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:

Cost of Goods Sold

Expenses directly related to manufacturing goods that a firm sells.

Finished Goods

Merchandise that has been through the manufacturing phase and is now ready for customer purchase.

Accounts Receivable

Financial obligations customers have towards a business for received goods or services that remain unpaid.

Factory Overhead

Refers to the indirect costs associated with manufacturing, including costs for utilities, rent, and maintenance of equipment not directly tied to the production of goods.