The Percentage of Completion Profit for a Particular Project of Redgate

question 6

Multiple Choice

The percentage of completion profit for a particular project of Redgate Ltd was $200 000 for year 1 and $220 000 for year 2 (completion) .
-What difference would there be to the total profit for the two years if the completion of production method were used?

• A) Profit would be $200 000 higher.
• B) Profit would be $420 000 higher.
• C) Profit would be $420 000 lower.
• D) There would be no difference.

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Definitions:

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be converted to cash in the short term.

Pledged Receivables

Assets owed to a company that have been used as collateral for a loan or other financial agreement.

Loan Collateral

Security that a borrower offers a lender to secure a loan.

Uncollected Accounts

Accounts receivable that have not yet been paid by customers, representing outstanding debts owed to a business.