Test 1 - Financial Analysis, page 2 6. Construction Project C has both a reliable contract price and a reliable cost estimate. Construction Project D has an unreliable cost estimate. Which revenue recognition method can be used? Project C Project D A. Completed contract Completed contract B. Percentage-of-completion Completed contract C. Percentage-of-completion Percentage-of-completion 7. Which of the following statements about the appropriate revenue recognition method to use, given the status of completion of the earnings process and the assurance of payment, is TRUE? The: A. Completed contract method is used if a reliable estimate of the total costs of the contract exists. B. Cost recovery method is used when collection is assured because of receipt of partial payment C. Percentage-of-completion method is used when ultimate payment is assured and cost and revenue estimates are reliable. 8. Which statement about the indirect method of calculating the Statement of Cash Flows is false? A. Adjustments are made for the fiscal period's changes to working capital (current asset and current liability) accounts B. Depreciation is added back to net income since it is an expense not requiring cash. C. No adjustment is needed to account for changes in accounts receivable since no cash was involved. narne