In Year 1, Northern Construction Agrees to Build a Fire $\text { Year } 1 \quad \text { Year } 2$

question 72

Multiple Choice

In year 1, Northern Construction agrees to build a fire station that will be completed in year 2.Construction starts in year 1.The station will have costs of $2,000,000 in year 1 and $2,000,000 in year 2.Northern receives payment for the station of $5,000,000 in advance, in year 1.If Northern uses the completed contract method, what net profit is recognized by Northern in each year?
$\text { Year } 1 \quad \text { Year } 2$

• A)\(\$ 0 \quad \$ 1,000,000\)
• B)\(\$ 1,000,000 \quad \$ 0\)
• C)\(\$ 3,000,000 \quad(\$ 2,000,000)\)
• D)\(\$ 500,000 \quad \$ 500,000\)
• E)\(\$ 250,000 \quad \$ 750,000\)

---

Definitions:

Law Of Effect

A principle in psychology that states behaviors followed by positive outcomes are likely to be repeated, and those followed by negative outcomes are not.

Thorndike

An American psychologist known for his work in the development of the theory of connectionism and contributions to educational psychology.

Operant Conditioning

The procedure of influencing the level of a behavior by the use of positive reinforcement or negative sanctions.

Law Of Effect

A principle stating that responses followed by satisfactory outcomes become more likely to occur, and those followed by unsatisfactory outcomes become less likely.