In selecting an accounting method for a newly contracted long-term construction project, the principle factor to be considered should be:
A) The terms of payment in the contract.
B) The kind of technical facilities used in construction.
C) How reliable would an estimate be of the progress toward contract completion?
D) The method usually used by the contractor to account for other long-term construction contracts.

Question

Quizplus · Accepted Answer

The most important factor to consider when selecting an accounting method for a long-term construction project is how reliable an estimate would be of the progress toward contract completion. This information will allow a contractor to accurately recognize revenue and costs throughout the life of the project. The terms of the payment in the contract, the technical facilities used in construction, and the method usually used by the contractor to account for other long-term construction contracts are all important factors to consider, but they are not as critical as the reliability of progress estimates.

In Selecting an Accounting Method for a Newly Contracted Long-Term