How Is the Prudence Principle Applied to the Accounting for Construction

question 30

Multiple Choice

How is the prudence principle applied to the accounting for construction contracts?

• A)If a loss is expected on the contract, all of this loss is immediately recognized.
• B)Only a proportional amount of revenue and expenses are recorded each year.
• C)If a loss is expected on the contract, a loss is recognized in the current year based on the degree of completion.
• D)Under this principle, good news is reflected earlier than bad news.

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Definitions:

Selectively Permeable

A property of cell membranes that allows certain molecules or ions to pass through it by means of active or passive transport, while blocking others.

Transmembrane Proteins

Proteins that span across the cell membrane, facilitating various functions such as transport and signaling.

Cytosol

The liquid component of the cytoplasm, in which organelles, proteins, and other cell structures are suspended, facilitating intracellular transport and biochemical reactions.

Cytoplasm

the jelly-like fluid that fills a cell, enclosing the organelles and providing the medium for cellular processes.