The Percentage-Of-Completion Method Violates the General Rule for Revenue Recognition

question 9

Multiple Choice

The percentage-of-completion method violates the general rule for revenue recognition that:

• A) Collection is reasonably assured.
• B) Costs are known or reasonably estimated.
• C) The earnings process is complete.
• D) Collections have been received.

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Definitions:

Variance Accounts

Financial accounts used to record the differences between planned and actual figures in budgeting and accounting.

Favorable Variances

Differences between planned and actual performance that result in a better-than-expected financial outcome.

Materials Price

The cost associated with acquiring raw materials required for production or manufacturing processes.

Labor Quantity

The amount of labor required or used in the production process, often measured in terms of hours or labor units.