An Ordinary Expense I.is Normal, Common, and Accepted Under the Circumstances of the Circumstances

question 14

Multiple Choice

An ordinary expense
I.is normal, common, and accepted under the circumstances of the business community.
II.is an expense commonly incurred in an income-producing activity.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

Understand the percentage-of-completion method for recognizing profits on long-term contracts.

Identify the implications of revising project cost estimates on profit recognition.

Calculate project profitability using the percentage-of-completion and cost-to-cost methods.

Understand the accounting treatment for excess or deficit of Construction in Progress over Partial Billings.

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Definitions:

Original Owner's

Pertains to the initial proprietor or founder of a business or asset.

Entrepreneurship

Risk-taking behaviour that results in new opportunities.

Economic Independence

The condition of having sufficient income or wealth to live without having to depend on support from others.

Small Business Failure Rates

The percentage of small businesses that cease operations within a certain period, often used as an indicator of the small business sector's health or economic conditions.