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:

Price of Good

The monetary value assigned to a product or service, determined by various factors including production costs, supply and demand, and competition.

Giffen Good

A product that people consume more of as the price rises, violating the basic law of demand.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods or services.

Indifference Curve

A chart illustrating diverse pairings of two items that offer the same level of contentment and usefulness to a shopper.