#14 How should the balances of Progress Billings and Construction in Process be shown at reporting dates prior to the completion of a long-term contract? Question 14 options:aNet balance, as income from construction if credit balance, and loss from construction if debit balancebProgress Billings as deferred income, Construction in Progress as a deferred expensecProgress Billings as income, Construction in Process as inventorydNet balance, as a current asset if debit balance, and current liability if credit balance

Introduction: Progress billing is a form of invoicing that ensures a consistent payment schedule throughout a large-scale, long-term project. Customers are billed on a predetermined schedule based on the accomplishment of milestones.Construction is the most typical use of the approach. In businesses where projects might take months—even years—and cost hundreds of thousands or millions of dollars, progress billing is a means to keep track of invoices.Progress billing is a form of invoicing that ensures a consistent payment schedule throughout a large-scale, long-term project. Customers are billed on a predetermined schedule based on the accomplishment of milestones.Construction is the most typical use of the approach. In businesses where projects might take months—even years—and cost hundreds of thousands or millions of dollars, progress billing is a means to keep track of invoices. While the notion of incremental billing related to progress milestones is most commonly associated with the construction industry, it makes sense for a variety of enterprises. Even though it's a simple idea, there are a few subtleties to be mindful of when it comes to execution that firms and customers should be aware of. Answer D. Net balance, as a current asset, if debit balance and current liability if the credit balance Explanation: Any difference between progress billing and construction in progress to date must be supported as a current asset if progress billing construction is in progress and as construction liability if progress billing construction is in progress.

Answered: #14 How should the balances of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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#14

How should the balances of Progress Billings and Construction in Process be shown at reporting dates prior to the completion of a long-term contract?

Question 14 options:

a	Net balance, as income from construction if credit balance, and loss from construction if debit balance
b	Progress Billings as deferred income, Construction in Progress as a deferred expense
c	Progress Billings as income, Construction in Process as inventory
d	Net balance, as a current asset if debit balance, and current liability if credit balance

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