The Completed Contract Method for Accounting for Long-Term Construction Projects

question 468

Multiple Choice

The completed contract method for accounting for long-term construction projects requires that

• A)no revenue is recognized until the project is completed.
• B)costs are accumulated and revenue is recognized in proportion to cash collected.
• C)gross profit is calculated each period, but deferred until the end of the contract.
• Revenue Recognition 6 - 13
• D)revenue is calculated each period, but deferred until the end of the contract.

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Definitions:

Zero Marginal Cost

The situation when producing an additional unit of a good or service does not increase the total cost of production, often associated with digital products or services.

Pushcart

A small cart or wheeled vehicle typically used by vendors for selling goods in public places.

Output

The quantity of goods or services produced in a given period of time by a firm, industry, or country.

Inverse Demand

A conceptual representation showing the relationship between the price of a good and the quantity demanded, expressed with price as a function of quantity.