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Using the Percentage-Of-Completion Method for Recognising Profit on a Construction

question 7

Multiple Choice

Using the percentage-of-completion method for recognising profit on a construction contract is advisable in situations where:


Definitions:

Balance Sheet

A financial delineation of a business's assets, owing, and the portion of equity held by its shareholders, at a distinct point.

Days' Sales In Receivables

A financial ratio that measures the average number of days it takes a company to collect payment after making a sale.

Sales On Account

Transactions where the buyer purchases goods or services on credit, with an agreement to pay at a later date.

Accounts Receivable

Funds that clients or customers are yet to pay to a company for products or services that have already been provided or utilized.

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