The percentage-of-completion method violates the general rule for revenue recognition that:
A) Collection is reasonably assured.
B) Costs are known or reasonably estimated.
C) The earnings process is complete.
D) Collections have been received.

Question

Quizplus · Accepted Answer

The percentage-of-completion method recognizes revenue as the project progresses, even if the earnings process is not complete. This violates the general rule for revenue recognition that the earnings process must be complete before revenue can be recognized.

The Percentage-Of-Completion Method Violates the General Rule for Revenue Recognition