The percentage-of-completion method for recognising profit on a construction contract will usually:

Question

Quizplus · Accepted Answer

The percentage-of-completion method recognises revenue and expenses based on the percentage of work completed during the reporting period. As a result, it can show a higher profit in some years and a lower profit in others, depending on the progress of the project. On the other hand, the completed-contract method recognises revenue and expenses only when the project is completed, which may result in higher profits in the final year but no income recognition until then. Therefore, option B is the best choice.

The Percentage-Of-Completion Method for Recognising Profit on a Construction Contract