Question

When accounting for a long-term construction contract for which revenue is recognized over time according to the percentage of completion, gross profit is recognized in any year is debited to:

Answer 1

Answer: Contract sum and credited to income account.

Step-by-step explanation:

The firm normally receives payment before the commencement of contact. If the contract exceeds an accounting year profit recognize for that year is debited to the contract sum received and credited to income statement for the year.