Inventory Is Reported at Cost Plus Gross Profit Recognized to Date

question 45

Multiple Choice

Inventory is reported at cost plus gross profit recognized to date under which of the following revenue recognition methods?

• A) completed contract method
• B) installment method
• C) cost recovery method
• D) percentage of completion method

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Definitions:

Net Realizable Value

The amount of cash expected to be received from the sale of inventory, after deducting the costs necessary to make the sale.

Bad Debt

Accounts receivable that a company is unable to collect, representing a financial loss when customers fail to fulfill their payment obligations.

Generally Accepted Accounting Principles

A set of accounting standards and practices that are used to prepare financial statements in the United States, ensuring consistency and comparability across businesses.

Net Realizable Value

The estimated selling price of goods minus the costs of their completion and disposal, used in determining the value of inventory on a balance sheet.