Ying Construction Company Entered into a Contract to Build a New

question 106

Multiple Choice

Ying Construction Company entered into a contract to build a new airport terminal for $2,500,000. Construction commenced on August 1, 2011, with a planned completion date of December 31, 2013. A summary of the costs, billings, and collections is provided below: Ying uses the percentage of completion method. What amount would appear as accounts receivable on Ying's December 31, 2012 balance sheet?

• A)$100,000
• B)$140,000
• C)$1,000,000
• D)$1,400,000

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Definitions:

Indirect Method

A technique used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to arrive at cash flow from operating activities.

Operating Activities

Activities that relate directly to the primary operations of a company, such as sales and service activities, and are reflected in the company's cash flows.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired, reflecting its decrease in value over time.