When the Cost Basis Is Used to Calculate the Percentage

question 19

Multiple Choice

When the cost basis is used to calculate the percentage of completion,cost items that may need adjustment include:

• A) discounts for the bulk purchase of construction materials.
• B) gains and losses on foreign currency translation.
• C) materials delivered and paid for, but not yet used.
• D) interest charges on late payments for materials and other items used in the construction project.

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Definitions:

Adjusting Journal Entry

An accounting entry made to correct or update the financial records and ensure accurate reporting.

Liabilities

Financial obligations or debts that a company owes to external parties, which must be settled over time through the transfer of economic benefits.

Deferral

Accounting method to postpone the recognition of revenues or expenses until a future accounting period.

Journal Entry

A record in the accounting ledger that represents a transaction and its effect on various accounts, used for tracking and organizing financial data.