Assertion (A) : When work certified is less than 1/4 of the contract price, a zero value of attributable profit taken into account. Reason (R): The profit outcome of the contract cannot be estimated with reasonable accur

CS Executive · Cost and Management Accounting · PYQS · June 2019
Assertion (A) : When work certified is less than 1/4 of the contract price, a zero value of attributable profit taken into account. Reason (R): The profit outcome of the contract cannot be estimated with reasonable accuracy and amount of carried forward as provision against future losses, increase in prices and other contingencies. Select the correct answer from the options given below:
(A) Both (A) and (R) are true and (R) is the correct explanation of (A)
(B) Both (A) and (R) are true and (R) is not the correct explanation of (A)
(C) (A) is true, but (R) is false
(D) (A) is false, but (R) is true

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Contract Costing

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