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The percentage of completion method should be used under which situation?
The percentage of completion method should be used under which situation?
(A) Revenues are recognized during the contract period
(B) Revenues are recognized at time of payment
(C) Gross profit is recognized at time of project completion
(D) Expenses are recognized at time of project completion
1 Answer
- MohammadLv 77 years agoFavorite Answer
The answer is:
"(A) Revenues are recognized during the contract period"
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Percent of completion method is an accounting term that is used primarily for construction companies. In accounting, you want to try matching your expenses with the revenue you produce, so the percent of completion method looks at your revenue from a contract and applies it proportionally to how much of the project you have completed. The calculation involves three items: construction in progress, construction expenses and construction revenues. Once you make these calculations, you can then enter your journal entries into the company's general ledger.
Read more: http://www.ehow.com/how_8339429_calculate-percenta... .
