CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Under the percentage-of-completion method, revenue is recognized ______

A. when a project is complete.
B. throughout a project, based upon the amount of work completed each year.
C. throughout a project, based upon the amount of cash received from the customer.
Correct Answer: B

The revenue will be recognized over the period of the contract, based upon the percentage of work completed.

User Contributed Comments 9

User Comment
hoiletab dont you have to receive the funds?
treakj No, what matters is the expenses the firm have incurred. Any differences will be accounted as liability or asset.
eb2568 yes treakj, and as the company works each year it will incur costs, and those costs are used for the % complete
Khadria Work completed may NOT be equal to the cost incurred ! ! !
MattyBo Costs incurred to date / Estimated project cost x Total contract price - revenue recognized in prior periods

So it is a % of work completed
rfvo Journal enteries would be helpful.
JKiro hoiletab:
differentiate between "under %-of-completion" revenue vs. "under completed contract" revenue
majesty C would be true for Installment Sales method.
johntan1979 But not for Cost Recovery method.
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