Choose the correct statement about accounting for long- term contract revenue. Assume a firm with...
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Accounting
Choose the correct statement about accounting for long- term contract revenue. Assume a firm with only one contract which is not yet completed. Case 1 refers to recognizing revenue over time based on the percentage of completion. Case 2 refers to recognizing revenue only upon the completion of the project.
a) The CIP balance under case 1 equals cost incurred to date plus gross profit recognized to date unless the contract faces an overall loss
b) The CIP balance is typically the same under both case 1 and 2
c) The positive amount: cost incurred to date + gross profit to date billings to date is a current asset account
d) Construction expense for a year does not equal construction cost incurred that year if there is a single period loss on a profitable contract
e) Billings on contracts is a liability account
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