In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year to the
A) total costs incurred to date.
B) total estimated cost.
C) unbilled portion of the contract price.
D) total contract price.

Question

Quizplus · Accepted Answer

The percentage-of-completion method recognizes gross profit based on the percentage of completion, calculated as the costs incurred during the year divided by the total estimated cost of the project.

In Accounting for a Long-Term Construction-Type Contract Using the Percentage-Of-Completion