Multiple choice

Directions: Choose the correct option for the given question:

When completion stage of contract is less than 1/4, the total expenditure on the contract is transferred to ______ account.

  1. finished goods

  2. work-in-progress

  3. expenditure

  4. contract

  5. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When a contract is in its very early stages (less than 1/4 complete), the accumulated costs are carried forward in the work-in-progress account until the contract reaches a stage where profit can be recognized.

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