The Provision for a Loss on an Unprofitable Contract May

question 71

True/False

The provision for a loss on an unprofitable contract may be combined with the Construction in Process account balance under percentage-of-completion but not completed-contract.

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Definitions:

Legal Entity

An organization that possesses legal rights and responsibilities, including the ability to enter contracts, sue, and be sued; can be a company, non-profit, or government organization.

Governmental Agency

An organization established by a government to administer specific legislation and carry out public policies.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of the shareholders or owner.

Net Income

The net income a company earns once all costs and taxes are subtracted from the total revenues.