The Percentage-Of-Completion Method

question 49

Multiple Choice

The percentage-of-completion method

• A)recognizes a portion of the contract price as revenue during each accounting period of construction.
• B)bases the amount of revenue, expense, and income on the proportion of total work performed during the accounting period.
• C)measures the proportion of total work carried out during the accounting period either from engineers' estimates of the degree of completion or from the ratio of costs incurred to date to the total costs expected for the entire contract.
• D)all of the above.
• E)none of the above.

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Definitions:

Manufacturing Costs

The total expenses involved in the manufacture of products, including direct materials, direct labor, and factory overhead.

Inventory Accounts

Accounts used to track the cost of goods that are either manufactured or purchased for resale by a business.

Expense Accounts

Expense accounts are ledger accounts that track the costs incurred by an organization during its operations.

Cost Accounting Systems

Systems used by businesses to record, measure, and report on costs associated with their operations, to aid in budgeting and performance evaluation.