Use the Following Information for Questions

question 392

Multiple Choice

Use the following information for questions. Clarinet Ltd.began work in 2014 on a contract for $1,200,000.Other details follow:
-Assume that Clarinet uses the completed-contract method of accounting.The portion of the total gross profit to be recognized in 2015 is

• A)$150,000.
• B)$225,000.
• C)$387,500.
• D)$1,200,000.

---

Definitions:

Induced Consumption

The portion of consumer spending that increases as disposable income rises, typically leading to more purchasing.

Disposable Income

The envelope of funds available to households for the purposes of saving and spending after adjusting for income taxes.

Consumption

The use of goods and services by households for personal needs or to maintain their standard of living.

Autonomous Consumption

Consumption spending that occurs even when income is zero, representing the basic level of consumption necessary for survival.