The percentage-of-completion method of accounting for long-term construction projects is supported on the basis that it:
A) Understates cost of goods sold.
B) Better conforms to the cost principle.
C) Produces a realistic matching of expenses with revenues.
D) is more conservative than the completed contract method.

Question

Quizplus · Accepted Answer

The percentage-of-completion method produces a more realistic matching of expenses with revenues because it recognizes revenue and expenses as the work is progressing, rather than waiting until completion of the project. This method is considered more accurate because it takes into account the ongoing progress of the project and adjusts revenue and expenses accordingly.

The Percentage-Of-Completion Method of Accounting for Long-Term Construction Projects Is