When using the percentage-of-completion method to account for a long-term contract, the percentage used to recognize gross profit in the first year is determined by dividing ________.
A) costs incurred in the first year by estimated total costs of the project
B) costs incurred in the first year by estimated remaining costs of the project
C) costs in the first year by contract price
D) estimated total profit by contract price

Question

Quizplus · Accepted Answer

The percentage-of-completion method recognizes revenue based on the proportion of costs incurred to date compared to the estimated total costs of the project.

When Using the Percentage-Of-Completion Method to Account for a Long-Term