Under the completed-contract method
A) revenue, cost, and gross profit are recognized during the production cycle.
B) revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed.
C) revenue, cost, and gross profit are recognized at the time the contract is completed.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

Under the completed-contract method, revenue, cost, and gross profit are recognized at the time the contract is completed. Prior to completion, costs are accumulated in a deferred cost account and revenue is recognized only to the extent of billings. Therefore, the correct answer is option C.

Under the Completed-Contract Method