During the period of construction, financial information related to a long-term contract, which is being accounted for using, the completed contract method will:
A) Appear only on the income statement during the period of construction.
B) Appear on both the income statement and balance sheet during the construction period.
C) Not appear on the financial statements.
D) Appear only on the balance sheet during the period of construction.

Question

Quizplus · Accepted Answer

Under the completed contract method, revenue, expenses, and profits related to the contract are recognized only upon completion of the contract. Therefore, during the construction period, financial information (such as costs incurred) appears as work in progress on the balance sheet, but not on the income statement.

During the Period of Construction, Financial Information Related to a Long-Term