1. A company recognizes income for a five-year construction contract as the performance obligation is being satisfied. If the company uses the cost-to-cost approach to measure progress on the contract, which of the following items will the company use to calculate the profit recognized in the third year?

Progress billings to date

Profit previously recognized

A.

Yes

Yes

B.

Yes

No

C.

No

Yes

D.

No

No

2. A company accounts for a long-term construction contract by recognizing income and expenses at a point in time. Revenue is recognized when

Cash is collected

Progress billings exceed recorded costs

A.

Yes

Yes

B.

Yes

No

C.

No

Yes

D.

No

No

3. To recognize revenue from a contract, the contract must

Have explicit payment terms

Be in writing

A.

Yes

Yes

B.

Yes

No

C.

No

Yes

D.

No

No

4. When computing purchasing power gain or loss on net monetary items, which of the following accounts is classified as nonmonetary?

A.

Held-to-maturity debt security.

B.

Patent accumulated amortization.

C.

Prepaid rent.

D.

Note receivable.