Which of the Following Is NOT a Difference Between the Percentage-Of

question 31

Multiple Choice

Which of the following is NOT a difference between the percentage-of completion and completed-contract methods of accounting for long-term construction contracts?

• A) They report different amounts for inventory during the construction period.
• B) They report different amounts for progress billings during the construction period.
• C) They cause a different cash inflow during the construction period.
• D) They report different amounts for accounts receivable during the construction period.

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Definitions:

Design Capacity

The maximum output that a facility or process is designed to achieve under specific conditions.

Effective Capacity

The maximum output level that a facility can realistically achieve under normal operating conditions and constraints.

Utilization

The degree to which a capacity, resource, or system is being used effectively to produce goods or services.