Which of the Following Statements About the Percentage of Completion

question 35

Multiple Choice

Which of the following statements about the percentage of completion method of revenue recognition is NOT true?

• A) The percentage of completion method reflects the economics of what is happening.
• B) The percentage of completion method is more conservative than the completion of production method.
• C) Total costs must be reasonably determinable.
• D) The use of this method requires considerable judgment.

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Definitions:

Excess (Deficiency)

The amount by which actual income exceeds or falls short of the budgeted amount.

Cash Budget

A financial tool used by businesses to plan for their cash inflows and outflows over a specific period to manage liquidity.

Budgeted Disbursements

Forecasted cash outflows for a specific period, often part of a company's cash budget and crucial for managing liquidity.

Desired Balance

The targeted amount of funds or resources a company or individual aims to have available at a certain point in time for a specific purpose.