How Is Revenue Recognized on a Cost Plus 7% Contract

question 53

Multiple Choice

How is revenue recognized on a cost plus 7% contract?

• A)Revenue is recognized only after the contract is completed.
• B)Revenue and expenses are recognized in proportion to the degree of progress.
• C)Record an amount of revenue equal to the costs that are expected to be recovered on the contract.
• D)Revenue equal to the cost plus 7% profit will be recorded each year.

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Definitions:

Cutbank

The steep bank feature formed on the outer portion of a meander curve in a river, resulting from the erosion processes of the moving water.

Stream

A flowing body of water confined within a bed and banks, moving continuously in a specific direction.

Depositional Feature

Depositional features are structures formed by the accumulation of sediment from wind, water, ice, or biological activity, including deltas, dunes, and sandbars.

Velocity

The speed and direction of an object's motion.