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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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