Under the Earnings Approach, How Should the Balances of Progress

question 24

Multiple Choice

Under the earnings approach, how should the balances of progress billings and construction in process be shown at reporting dates prior to the completion of a long-term contract?

• A)Progress billings as deferred income, construction in progress as a deferred expense.
• B)Progress billings as income, construction in process as inventory.
• C)Net, as a current asset if debit balance and current liability if credit balance.
• D)Net, as income from construction if credit balance, and loss from construction if debit balance.

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Definitions:

Contract Warehousing

A logistics service model where a company hires a third-party provider under a contract to manage and operate a warehouse on their behalf.

3PL Warehousing

Third-party logistics involving the outsourcing of warehousing and distribution functions to a specialized company.

Distribution KPIs

Key Performance Indicators specific to distribution, measuring the efficiency, accuracy, and speed of distributing goods to the end customer.

Speed of Service

The rate at which a business can complete a service or deliver a product, often a critical competitive advantage in fast-paced industries.