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

question 4

Multiple Choice

Using the cost method to calculate the percentage of completion,the formula for the amount of revenue and 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).
• E) None of the given answers.

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Definitions:

Market Outcome

The result of all the buying and selling activities within a particular market, including price levels and quantities traded.

Equitable

Equitable refers to something characterized by fairness, impartiality, and justice, particularly in the way people are treated or decisions are made.

Market Failure

When the free market's distribution of goods and services is inefficient, it typically results in a reduction of societal welfare.

Inefficient Allocation

A situation where resources are not used in the best possible way, often leading to waste or unmet needs.