KINDLY ANSWER WITH EXPLANATIONS. Transcribed Image Text: 1) Percentage of Completion is favored to be used under the following circumstances, except A. Contract Costs can be reliably estimated B. Contract

KINDLY ANSWER WITH EXPLANATIONS. Transcribed Image Text: 1) Percentage of Completion is favored to be used under the following circumstances, except
A. Contract Costs can be reliably estimated
B. Contract Price is assured
C. Progress Billings is assured of collection
D. Performance obligation can be reliably measured
2) S1: Cost plus contract is a contract used on long term construction contracts in which the
contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit
of output, which in some cases may be subject to cost escalation clauses. S2: Variable contract
is a construction contract in which the contractor is reimbursed for allowable or otherwise defined
costs, plus a percentage of these costs or a fixed fee.
A. Both are true
B. S1 True; S2 False
C. Both are false
D. S2 True; S1 False
3) Which of the following shall be excluded in the contract costs of a construction contract?
A. Costs that directly relate to the specific contract
B. Selling costs such as advertisement expense or commissions of real estate agents or brokers
C. Costs that are directly attributable to contract activity in general and can be allocated to the
contract
D. Such other costs as are specifically chargeable to the customer under the terms of the contract
4) S1: Zero Profit Method in revenue recognition principle recognizes income upon the completion
a construction contractS2: A contract asset exists when Contract revenue to date is less than
progress billings to date
A. S2 True
B. Both are true
C. Both are false
D. S1 True
5) All of the following accounts are impliedly contained in the account “Construction in Progress”
except
A. Contract Revenue to date
B. Gross Profit to date
C. Progress Billings to date
D. Costs incurred to date

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