Question

1. Assurning a long-term construction project makes an overall profit, during the interim years, percentage of completion method accounting has impact on construction company's: Income Statement ONLY X Balance Sheet ONLY BOTH Income Statement and Balance Sheet None of the above 2. When a company write-off a bad debt under GAAP, it has impact on this company's: Income Statement ONLY Balance Sheet ONLY BOTH Income Statement and Balance Sheet Cash Flow Statement ONLY х 3. For a construction company working on long-term contracts, construction in process (CIP) should be classified as what type of account on the Balance Sheet? X Long-term Asset Short-term Asset Owner's Equity Long-term Liability 4. Under the percentage-of-completion method, what journal entries (entry) increase(s) the balance of construction in process account? Recognition of construction costs ONLY Recognition of gross profit ONLY х BOTH recognition of construction costs and recognition of gross profit To close completed project

Answer 1

1. Both income statement and balance sheet. because the percentage of completion reflects the same in balance sheet. And it also affects the profit in profit and loss statement.

2.Both Income statement & balance sheet. While writing off bad debt the amount of debtor decreases which affects the balance sheet. And the amount also reflects in statement of income in debit side which affects the net income.

3.Long term Asset

4.To close completed project

5.Percentage of completion method

6.Both Income statement & balance sheet. While estimating bad debt the amount of debtor decreases which affects the balance sheet. And the amount also reflects in statement of income in debit side which affects the net income.

7.Accounts Receivable

8.Liability.