Quiz 7 Key - balance. 4. If the completed-contract method...

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Quiz 7 (Ch 8: Revenue recognition) 1. An adjusting entry in which revenue is recognized and a receivable is established indicates that revenue has been Earned Collected 1. Yes No 2. Yes Yes 3. No Yes 4. No No 2 Which of the following would be used in the calculation of the gross profit recognized in the second year of a three-year contract that is accounted for using the percentage-of-completion method ? Actual Income Contract Total Previously Price Costs Recognized 1. Yes Yes No 2. Yes Yes Yes 3. Yes No Yes 4. No Yes Yes 3. How should the balances of Progress Billings and Construction in Progress be shown at reporting dates prior to the completion of a long-term contract? 1. Progress Billings as income, Construction in Progress as inventory. 2. Net, as income from construction if credit balance, and loss from construction if debit balance. 3. Progress Billings as deferred income, Construction in Progress as a current asset. 4. Net, as a current asset if debit balance and current liability if credit
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Unformatted text preview: balance. 4. If the completed-contract method is used, what is the basis for determining the income to be recognized in the second year of a three-year contract? 1. Cumulative actual costs incurred only. 2. Incremental cost for the second year only. 3. Latest available estimated costs. 4. No income would be recognized in year 2. 5. When using the installment sales method , 1. total revenues and costs are recognized at the point of sale, but gross profit is deferred in proportion to the cash that is uncollected from the sale. 2. gross profit is deferred until all cash is received, but revenues and costs are recognized in proportion to the cash collected from the sale. 3. gross profit is recognized only after the amount of cash collected exceeds the cost of the item sold. 4. revenue, costs, and gross profit are recognized proportionally as the cash is received from the sale of product....
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Quiz 7 Key - balance. 4. If the completed-contract method...

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