..... refers to the part payment made by the contractee to the contractor on the basis of certificate issued by the architect to the contractee.

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

____ refers to the part payment made by the contractee to the contractor on the basis of certificate issued by the architect to the contractee.

A	Work certified
B	Work in progress
C	Notional profit
D	Progress payment

Explanation:

Detailed explanation-1: -Cash received on contract is credited to the contract account.

Detailed explanation-2: -In contract costing there are two parties involved – Contractor (who undertakes the job to be completed) and contractee (owner or the person for whom job is completed). In contract costing the cost unit is the contract itself. Contracts are completed at the work site generally by the contractor.

Detailed explanation-3: -WIP refers to the raw materials, labor, and overhead costs incurred for products that are at various stages of the production process. WIP is a component of the inventory asset account on the balance sheet. These costs are subsequently transferred to the finished goods account and eventually to the cost of sales.

Detailed explanation-4: -Contract costing, also known as terminal costing, is a variant of job costing. Contract means a big job in which work is done at site and not in factory premises. The cost of each contract is ascertained.

There is 1 question to complete.