The Completed Contract Method for Accounting for Long-Term Construction Projects

question 100

Multiple Choice

The completed contract method for accounting for long-term construction projects requires that

• A) no revenue is recognized until the project is completed.
• B) costs are accumulated and revenue is recognized in proportion to cash collected.
• C) gross profit is calculated each period, but deferred until the end of the contract.
• D) revenue is calculated each period, but deferred until the end of the contract.

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Definitions:

Amortization Expenses

The gradual write-off of the initial cost of intangible assets over a period of time, reflecting their consumption, expiration, or obsolescence.

DPS

Stands for Dividends Per Share, indicating the total dividends paid out by a company per share of its stock.

EPS

A financial ratio indicating how much money a company makes for each share of its stock, also known as earnings per share.

EBIT

A financial metric used to evaluate a company's operating performance by calculating its profit without the effects of financing and tax expenses.