Which of the following is not a difference between the percentage-of- completion and completed contract methods of accounting for long-term construction contracts?
A) One requires estimates of completion during the construction period and the other does not.
B) One records income (loss) each period during the construction period and the other does not.
C) They report different inventory amounts during the construction period.
D) They cause different cash inflows during the construction period.

Question

Quizplus · Accepted Answer

The difference between the percentage-of-completion and completed contract methods lies in the timing of revenue and income recognition, not in the cash inflows. Cash inflows are determined by the contract terms and progress billing, not by the accounting method used.

Which of the Following Is Not a Difference Between the Percentage-Of-