In Selecting an Accounting Method for a Newly Contracted Long-Term

question 124

Multiple Choice

In selecting an accounting method for a newly contracted long-term construction project, the principle factor to be considered should be:

• A) The terms of payment in the contract.
• B) The kind of technical facilities used in construction.
• C) How reliable would an estimate be of the progress toward contract completion?
• D) The method usually used by the contractor to account for other long-term construction contracts.

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Definitions:

Mailbox Rule

The principle that holds that an acceptance is valid when it is placed in the mailbox, whereas a revocation is effective only when received by the offeree. In some jurisdictions, the mailbox rule has been expanded to faxes.

Binding Contract

An agreement between two or more parties that is enforceable by law, where all parties have agreed to the terms through offer and acceptance.

Contractual Capacity

The legal ability of a person to enter into a binding contract.

Form a Contract

The process of creating a legally binding agreement between two or more parties.