In contract costing, if the amount of work certified is 1/2 or more but not near to completion, profit to be transferred to the statement of profit and loss can be calculated using the formula —

CS Executive · Cost and Management Accounting · PYQS · June 2015
In contract costing, if the amount of work certified is 1/2 or more but not near to completion, profit to be transferred to the statement of profit and loss can be calculated using the formula —
(A) 1/2 × notional profit × cash received / work certified
(B) 1/3 × notional profit × cash received / work certified
(C) 2/3 × notional profit × cash received / work certified
(D) Estimated profit × work certified / cash received

Answer & Explanation:

Correct Answer: Option (C)

Official answer key: (C).

Topics: Contract Costing

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