Tantramar Construction Has an October 31 Year End

question 59

Multiple Choice

Tantramar Construction has an October 31 year end. On October 20 Tantramar received a payment from Cantech Industries in the amount of $25,000 as an advance on the construction for the new head office of Cantech. Construction was to have started October 25 but due to an early snowfall, construction did not start until November 7. Construction is scheduled to be completed December 31. Following the revenue recognition criteria, the revenue which Tantramar should record in its October 31 Financial Statements is

• A) $10,000.
• B) $5,000.
• C) 0.
• D) none of the above.

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Definitions:

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Inventory Turnover Rate

A measure of how many times a company's inventory is sold and replaced over a specified period, indicating the efficiency of inventory management.

Net Income

Profit remaining after all expenses, taxes, and deductions have been subtracted from total revenue.

Accounts Receivable

Accounts receivable are the amounts owed to a company by its customers for goods or services delivered but not yet paid for.