The Percentage-Of-Completion Method of Accounting for Long-Term Construction Projects Is

question 98

Multiple Choice

The percentage-of-completion method of accounting for long-term construction projects is supported on the basis that it:

• A) Understates cost of goods sold.
• B) Better conforms to the cost principle.
• C) Produces a realistic matching of expenses with revenues.
• D) is more conservative than the completed contract method.

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Definitions:

Placed on Account

A term referring to a transaction being recorded on a company's books under an account receivable or payable, typically indicating a credit sale or purchase.

Accounting Equation

A foundational principle in accounting stating that assets equal liabilities plus equity, serving as the basis for the double-entry bookkeeping system.

Vendor Payment

The process of paying money owed to a supplier for products or services purchased on credit.

Services Performed

Refers to the completed tasks or provided services by a company or individual for which payment is due.