If the amount of work certified is 1/2 or more of the contract price:

CS Executive · Cost and Management Accounting · PYQS · December 2021
If the amount of work certified is 1/2 or more of the contract price:
(A) 2/3rd of the loss disclosed, as reduced by the percentage of cash received from the contractee, should be transferred to the profit and loss account
(B) 1/3rd of the loss disclosed, as reduced by the percentage of cash received from the contractee, should be transferred to the profit and loss account
(C) 3/4th of the profit disclosed, as reduced by the percentage of cash received from the contractee, should be transferred to the profit and loss account
(D) Total loss should be transferred to the profit and loss account

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Contract Costing

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