Which Statement About the Percentage of Completion Method Is Correct

question 86

Multiple Choice

Which statement about the percentage of completion method is correct?

• A)This method recognizes revenue on a straight-line basis.
• B)This method can only be used if there are no uncertainties about how much the contract will cost or how long it will take to complete.
• C)This method allocates revenue, not construction costs.
• D)This method allocates construction costs, not revenue.

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Definitions:

Purchasing Power

The value of currency expressed by the amount of goods or services that one unit of money can buy.

Inflation Rate

The speed at which the overall price level of goods and services increases, leading to a decline in purchasing power.

Compounded Quarterly

A method in which interest is added to the principal sum of a deposit or loan every three months, leading to interest on interest.

Compounded Monthly

Interest on an investment or loan that is calculated and added to the principal balance once a month, leading to faster growth.