In Year 1 a Contractor Agrees to Build a Building

question 108

Multiple Choice

In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2.The builder's cost is estimated to be $1,800,000.The actual costs year 1 are $900,000 and year 2's actual costs are $1,100,000.Under the percentage of completion method year 2's gross profit is

• A)$150,000.
• B)$500,000.
• C)$700,000.
• D)$350,000.

Know the functions of a Check Register and its role in tracking payments and deposits to the checking account.

Recognize the importance of separating personal and business finances, and the impact on accounting records.

Understand the basic accounting principles regarding the increase in asset and equity accounts.

Learn the correct approach to recording and paying bills using QuickBooks, including distinguishing between different methods of bill payments.

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Definitions:

Normal Costing System

An accounting method that assigns indirect costs based on a predetermined rate and direct costs based on actual values.

Actual Overhead Costs

The real expenses incurred for indirect materials, labor, and other costs that are not directly tied to the production of goods or services.

Predetermined Overhead Rate

The predetermined overhead rate is calculated by dividing estimated total overhead costs by an estimated allocation base, used to allocate overhead to products or job orders.

Direct Labour-Hours

A measure of the labor time worked directly on specific jobs or products.