How Should Earned but Unbilled Revenues at the Balance Sheet

question 113

Multiple Choice

How should earned but unbilled revenues at the balance sheet date on a long-term construction contract be disclosed if the percentage-of-completion method of revenue recognition is used?

• A) As construction in process in the current asset section of the balance sheet.
• B) As construction in process in the noncurrent asset section of the balance sheet.
• C) As a receivable in the noncurrent asset section of the balance sheet.
• D) In a note to the financial statements until the customer is formally billed for the portion of work completed.

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Definitions:

Cash Receipts

The collection of money, including coins, currency, checks, and electronic payments, received by a business during a given period.

Inventory

The goods and materials that a business holds for the purpose of resale or production.

Accounts Payable

An accounting entry representing a company's obligation to pay off a short-term debt to its creditors or suppliers.

Cost of Goods Sold

Costs directly linked to the creation of goods that a company sells, encompassing both material and labor expenses.