Using the Cost Method to Calculate the Percentage of Completion,the

question 67

Multiple Choice

Using the cost method to calculate the percentage of completion,the formula for the current period revenue or gross profit to be recognised is:

• A) costs incurred to the end of the current period divided by most recent estimate of total costs.
• B) estimated total revenue or gross profit from the contract multiplied by (costs incurred to the end of the current period divided by most recent estimate of total costs) less (total revenue or gross profit recognised in prior periods).
• C) costs incurred to the end of the current period divided by most recent estimate of total costs multiplied by (total revenue or gross profit recognised in prior periods).
• D) estimated total revenue or gross profit from the contract divided by (costs incurred to the end of the current period multiplied by most recent estimate of total costs) less (total revenue or gross profit recognised in prior periods).

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Definitions:

Lagging Indicator

A metric that shows the effects of economic events, trends, or investment performance after they have occurred.

BSC Performance Perspectives

The four angles (financial, customer, internal processes, and learning & growth) through which the Balanced Scorecard evaluates an organization's performance.

Leading Indicator

An economic or financial metric that predicts future trends and economic changes before they happen.

Sustainability Balanced Scorecard

A strategic planning and management system used to align business activities to the vision and strategy of the organization, emphasizing environmental and social sustainability.