Use the Following Information for the Following Questions:
in 2020 $\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$150,000$

question 7

Multiple Choice

Use the following information for the following questions:
In 2020, Cement Inc. began a three year construction contract for $ 3,500,000. Cement uses the percentage-of-completion method. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentation relating to this contract for calendar 2020 follow:
Statement of Financial Position
Current assets:
Accounts receivable $\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$150,000$
Contract asset/liability $\ldots \ldots \ldots \ldots \ldots \ldots \ldots105,000$
Contract costs $\$ 425,000$ less Billings of $\$ 320,000$ )

Income Statement
Income (before tax) on the contract recognized in $2020 \ldots \ldots \ldots . . \quad \$ 105,000$
-How much cash was collected in 2020 on this contract?

• A) $ 25,000
• B) $ 170,000
• C) $ 200,000
• D) $ 300,000

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Definitions:

Sarbanes-Oxley Act

A United States federal law enacted in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations.

Accounting Scandals

Incidents that involve deliberate manipulation of financial statements and records for the purpose of misleading investors and stakeholders.

Values

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Moral Philosophies

The study of questions about morality, including the goodness or badness of actions, the nature of virtue, and the foundations of ethical principles.