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Explain the Justification for Using the Percentage-Of-Completion Method to Recognise

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Essay

Explain the justification for using the percentage-of-completion method to recognise revenue for long-term construction contracts rather than the point of sale.


Definitions:

Sales Returns

Goods returned by buyers after sale due to defects, dissatisfaction, or other reasons, which are deducted from total sales revenue.

Unearned Revenue

Money received by an entity for a service or product yet to be provided or delivered.

Periodic Inventory System

An inventory accounting system where updates are made to inventory levels and cost of goods sold at specific periods.

Worksheet

A document used by accountants to bring together all the data for financial statements, making adjustments and closing entries.

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