The Completed Contract Method of Accounting for Long-Term Construction-Type Contracts

question 37

Multiple Choice

The completed contract method of accounting for long-term construction-type contracts is preferable when:

• A) Estimates of costs to complete and extent of progress toward completion are reasonably dependable.
• B) The contracts are of a relatively long duration.
• C) A contractor is involved in numerous projects.
• D) Lack of dependable estimates or inherent hazards cause forecasts to be doubtful.

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Definitions:

Entry Barriers

Obstacles that prevent or hinder potential competitors from entering a market or industry.

Substantial Entry

A significant entry of new firms into a market, often leading to increased competition and affecting market dynamics.

Flexible Prices

Product prices that freely move upward or downward when product demand or supply changes.

Product Demand

The desire and willingness to purchase a specific good or service in the market.