Under the completed-contract method, the Contract Asset/Liability account balance will consist ofconstruction costs only.gross profit only.construction costs and gross profit.O construction costs and billings.

The completed contract method is an accounting approach where revenue and expenses from long-term…

Under the completed-contract method, the Contract Asset/Liability account balance will consist of O construction costs only. O gross profit only. O construction costs and gross profit. O construction costs and billings.

Under the completed-contract method, the Contract Asset/Liability account balance will consist of O construction costs only. O gross profit only. O construction costs and gross profit. O construction costs and billings.

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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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

Under the completed-contract method, the Contract Asset/Liability account balance will consist of
construction costs only.
gross profit only.
construction costs and gross profit.
O construction costs and billings.

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