Which Statement Is Correct About the Impact of Estimation Errors

question 26

Multiple Choice

Which statement is correct about the impact of estimation errors on construction contracts?

• A)Underestimating future costs decreases the percentage complete ratio.
• B)Overestimating future costs increases the percentage complete ratio.
• C)Underestimating future costs increases the profit recognized in future periods.
• D)Underestimating future costs increases the profit recognized in the current period.

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Definitions:

World Price

The global market price of a commodity, determined by supply and demand in the international market.

Tariff

A tax imposed by a government on goods and services imported into a country, typically used to protect domestic industries.

Imported

Goods or services brought into a country from abroad for sale, contrasting with domestic products or services.

Producer Surplus

The discrepancy between what sellers are prepared to accept for a product or service and the actual amount they end up receiving.