Construction costs plus gross profit earned to date from a construction contract are accumulated in the construction in progress account less progress billings and these are disclosed in the liability section of the statement of financial position.

Question

Quizplus · Accepted Answer

Construction in progress (CIP) is an asset account on the balance sheet, reflecting the costs incurred plus gross profit earned to date on a construction contract, less progress billings. It is not disclosed in the liability section but rather in the assets section, as it represents the ongoing investment in construction projects not yet completed.

Construction Costs Plus Gross Profit Earned to Date from a Construction