The principal advantage of the completed-contract method is that
A) reported revenue is based on final results rather than estimates of unperformed work.
B) it reflects current performance when the period of a contract extends into more than one accounting period.
C) it is not necessary to recognize revenue at the point of sale.
D) a greater amount of gross profit and net income is reported than is the case when the percentage-of-completion method is used.

Question

Quizplus · Accepted Answer

The principal advantage of the completed-contract method is that reported revenue is based on final results rather than estimates of unperformed work. This method recognizes revenue and related expenses only when a contract is completed, providing a more accurate picture of the profitability of the project. This is particularly useful when there is uncertainty about the final outcome or completion of a project.

The Principal Advantage of the Completed-Contract Method Is That