Which statement is correct about the impact of estimation errors on construction contracts?
A)Underestimating future costs decreases the percentage complete ratio.
B)Overestimating future costs increases the percentage complete ratio.
C)Underestimating future costs increases the profit recognized in future periods.
D)Underestimating future costs increases the profit recognized in the current period.

Question

Quizplus · Accepted Answer

Underestimating future costs leads to recognizing more profit in the current period because the costs are lower than expected, which increases the profit margin.

Which Statement Is Correct About the Impact of Estimation Errors