How Is the Prudence Principle Applied to the Accounting for Construction

question 30

Multiple Choice

How is the prudence principle applied to the accounting for construction contracts?

• A)If a loss is expected on the contract, all of this loss is immediately recognized.
• B)Only a proportional amount of revenue and expenses are recorded each year.
• C)If a loss is expected on the contract, a loss is recognized in the current year based on the degree of completion.
• D)Under this principle, good news is reflected earlier than bad news.

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Definitions:

Spatially Separated

Positioned or distributed in different locations or spaces, often used to describe objects or individuals that are physically apart.

Gene Exchange

The process by which genes are transferred from one organism to another, often through mechanisms like bacterial conjugation, viral transduction, or sexual reproduction.

Logistic Growth

A model of population growth where the rate decreases as the population reaches its carrying capacity, eventually stabilizing.

Exponential Growth

A growth pattern in which the number of entities increases at a rate proportional to the current number, resulting in a rapid increase over time.