When Using the Completed Contract Method of Accounting for Long-Term

question 42

Multiple Choice

When using the completed contract method of accounting for long-term contracts:

• A)Estimated losses on the overall contract are recognized before the contract is completed.
• B)Expenses are recorded each period, but revenue is only recognized when the contract is completed.
• C)Use of this method is not permitted under generally accepted accounting principles.
• D)Neither gains nor losses are recognized until the contract is completed.

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Definitions:

Indorsement

An act of signing one's name on the back of a check or other negotiable instrument, thereby transferring the rights to another party.

Negotiation

The process by which two or more parties aim to reach a mutual agreement through dialogue and compromise on various issues.

Handwritten Signature

A person's unique method of writing their name with pen and paper, often used for authorization or personal verification.

Bearer Instrument

Any instrument that is not payable to a specific person, including instruments payable to the bearer or to “cash.”