Q11. The calculation of the income recognized in the third year of a five-year construction contract accounted for using the percentage-of-completion method includes the ratio of:
A) costs incurred in year 3 to total estimated costs.
B) total costs incurred to total estimated cost.
C) costs incurred in year 3 to total billings.
Q12. According to the installment method of accounting, gross profit on an installment sale is recognized:
A) in proportion to the cash collection. B) after cash collections equal to the cost of sales have been received. C) on the date the final cash collection is received.
Q13. Cash collection is a critical event for income recognition under the: Cost-Recovery Method Installment Method
A) Yes Yes B) No Yes C) Yes No
Q14. CPP Corporation has a contract to build a custom test chamber for a client for $100,000. CPP Corporation uses the percentage-of-completion method for accounting and estimates the total costs for the project to be equal to $80,000. CPP Corporation has promised to complete the project within three years. At year-end the customer has paid $60,000, equaling the total amount billed for the year, and total costs incurred to date are $40,000. On the income statement, net income for the year-end will be: A) $20,000. B) -$10,000. C) $10,000.
Q15. An analyst has gathered the following data pertaining to Hegel Company’s construction projects, which began during 2002:
| Project 1 | Project 2 | Contract price | $420,000 | $300,000 | Costs incurred in 2002 | 240,000 | 280,000 | Estimated costs to complete | 120,000 | 40,000 | Billed to customers during 2002 | 150,000 | 270,000 | Received from customers during 2002 | 90,000 | 250,000 |
If Hengel used the completed contract method, what amount of gross profit (loss) would Hengel report in its 2002 income statement for: Project 1 Project 2
A) $0 ($20,000) B) $0 $0 C) ($20,000) $0
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发表于 2009-1-17 09:00
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