In the Case of a Small Home Construction Company That

question 31

Multiple Choice

In the case of a small home construction company that builds under long-term contracts, generally:

• A) The percentage of completion method is required to report the income from the construction contracts.
• B) The percentage of completion method can be elected and generally will defer income until the contract is completed.
• C) The completed contract method can be used and generally will defer income.
• D) The accrual method must be used because inventories are an income-producing factor.
• E) None of the above is true.

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Definitions:

Gross Domestic Product

Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a certain period of time.

Leakage

Any diversion of income from the domestic spending stream; includes saving, taxes, and imports.

Circular Flow

A model in economics that describes the movement of resources, goods and services, and money among different sectors in an economy.