Specific Order Costing MCQs Quiz with Answers

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1. An essential of long-term costing is that:

It has a duration in excess of twelve calendar months.

It is a progress at a financial year-end and has a significant effect on the activity of the contractor for the period under review.

Its completion will require a number of stages, each of which must be certified and valued for profit calculation purpose.

It has a duration in excess of six calendar months.

2. A debit balance on the contractee account should be incorporated in the balance sheet as.

A current liability as ‘contract balances outstanding’.

Set-off against contract stock valuation.

Excess payments on account not set off against contract stock value.

In debtors as ‘amount recoverable on contract’.

3. Retention monies are best defined as:

Cash withheld by the contractee in order to improve the cash flow of the contractor.

Payment to the contractor, where it is desired to secure his services for a future contract.

Cash return to the contractee if actual profits on a contract are 10% higher than an agreed figure.

Cash withheld by the contractee under the terms of the contract when payment of the value certified are being made.

4. A zero value of attributable profit should be assumed where:

Any foreseeable loss is estimated for a later stage in the contract.

The interim estimated profit is less than 10% of value certified.

The profit outcome of the contract cannot be estimated with reasonable certainty.

The contract is less than 60% completed.

5. Which of the following is the most appropriate definition of turnover at intermediate stage in a contract?

The value of work done which leaves the agreed attributable profit when the cost of work certified is subtracted from it.

Cost of work certified to date plus estimated, profit to the end of the contract.

The value of work certified less any foreseeable losses.

Cost of work to date minus the cost of work not certified plus estimated profit to date.

6. Foreseeable losses estimated for a contract should be treated in which of the following ways?

Ignore until they are known to be accurate with reasonable certainty.

Write off immediately that they are estimated.

Write off in the same proportion as any estimated profits are recognized.

Write-up only if the work to which they relate is 50% completed.