The Percentage-Of-Completion and Completed Contract Methods of Accounting for Long-Term

question 113

Multiple Choice

The percentage-of-completion and completed contract methods of accounting for long-term construction contracts will produce:

• A) The same amount of income in the year of completion.
• B) The same inventory carrying value each year during the construction period.
• C) Equal balances each period in the Billings On Contracts account.
• D) The same cost of construction (expense) each year for a project.

---

Definitions:

Journal Entry

A record in accounting that represents a transaction and its effect on various accounts, ensuring the debits and credits balance.

Ledger

A book or collection of accounts in which account transactions are recorded and categorized to show changes in financial positions.

Total Debits

In accounting, this refers to the total sum of all debit entries recorded in all accounts for a given period.

Total Credits

The sum of all credit entries recorded in the accounting books of a business, reflecting the total value of transactions decreasing assets or increasing liabilities and equity.