Knowledge Check $01$

What is the relationship between Construction$-$in$-$progress $($CIP$)$ and the Billings on Construction Contract account?

Multiple Choice

Billings is contra to CIP and reduces the balance of the CIP account.

CIP is contra to accounts receivable and reduces the balance of the accounts receivable account.

CIP is an equity account and Billings is a liability.

Billings is an inventory account and CIP is a financial asset, like Accounts Receivable.