Which Statement Best Explains the Cost Recovery Method

question 83

Multiple Choice

Which statement best explains the cost recovery method?

• A)An accounting method that recognizes revenue and expenses on a contract only after it is completed.
• B)An accounting method that recognizes revenue and expenses on a contract in proportion to the degree of progress.
• C)An accounting method that recognizes contract costs as incurred and an amount of revenue equal to the costs that are expected to be recovered on the contract.
• D)An accounting method that recognizes revenue and expenses based on the fair value of the contract.

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Definitions:

Time-Weighted Return

A method to measure the rate of return of an investment portfolio which eliminates the distorting effects of inflows and outflows of money.

Dividend

Dividend represents the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Share

A unit of ownership in a company or financial asset, often traded on a stock exchange.

Arithmetic Average Return

The simple average of a series of returns over a period of time, calculated by summing the returns and dividing by the number of periods.