1.S1: Cost plus contract is a contract used on long term construction contracts in which the contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit of output, which in some cases may be subject to cost escalation clauses.S2: Variable contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee*

Both are false

S2 True; S1 False

S1 True; S2 False

Both are true

2.Which of the following shall be excluded in the contract costs of a construction contract?*

Costs that directly relate to the specific contract

Costs that are directly attributable to contract activity in general and can be allocated to the contract

Such other costs as are specifically chargeable to the customer under the terms of the contract

Selling costs such as advertisement expense or commissions of real estate agents or brokers

3.Percentage of Completion is favored to be used under the following circumstances, except*

Contract Price is assured

Progress Billings is assured of collection

Contract Costs can be reliably estimated

Performance obligation can be reliably measured

4.All of the following accounts are impliedly contained in the account "Construction in Progress" except:*

Contract Revenue to date

Gross Profit to date

Progress Billings to date

Costs incurred to date

5.: Zero Profit Method in revenue recognition principle recognizes income upon the completion a construction contractS2: A contract asset exists when Contract revenue to date is less than progress billings to date*

1 point

Both are true

Both are false

S1 True

S2 True