Cost Accounting

K. Alex

Chapter 10 Contract Costing - all with Video Answers

Educators

Chapter Questions

Problem 1

State whether the following statements are True or False:
In cost-plus contracts, the contractor runs a risk of incurring a loss.

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Problem 1

Choose the correct answer:
In contract costing, contract account is prepared by
(a) contractee
(b) contractor
(c) both a \& b
(d) none of these.

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Problem 2

State whether the following statements are True or False:
The contract, which is complete up to one fourth, one fourth of the profit can be transferred.

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02:14

Problem 2

Choose the correct answer:
Contract price is not fixed in case of
(a) de-escalation clause
(b) cost plus contracts
(c) escalation
(d) all the above.

Mihir Nayar

Numerade Educator

Problem 3

State whether the following statements are True or False:
In contract costing profit of each contract is computed when the contract is completed.

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Choose the correct answer:
When a contract is $50 \%$ complete, the amount of profit to be taken to the credit is
(a) estimated profit
(b) $50 \%$ of the estimated profit
(c) $2 / 3$ of estimated profit $\times$ cash ratio
(d) $1 / 3$ of estimated profit $\times$ cash ratio.

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Problem 4

State whether the following statements are True or False:
Contract costing is suitable where the products differ.

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Problem 4

Choose the correct answer:
When contract is not complete at the end of the financial year, loss on incomplete contract is
(a) transferred to profit and loss
(b) debited to profit and loss
(c) transferred to work-in-progress
(d) transferred to work-in-progress and profit and loss.

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Problem 5

State whether the following statements are True or False:
Contract costing and job costing are the same.

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Problem 5

Choose the correct answer:
Profit on incomplete contract is termed as
(a) notional profit
(b) costing profit
(c) gross profit
(d) net profit.

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Problem 6

State whether the following statements are True or False:
In contract costing payment of cash to the contractor is made on the basis of certified work.

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Problem 6

Choose the correct answer:
Work-in-progress in contract account consists of
(a) work certified and profit carried forward
(b) work certified
(c) work certified and work uncertified
(d) work certified, work uncertified and profit carried forward.

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Problem 7

State whether the following statements are True or False:
When the completion stage of a contract is less than $1 / 4$, the total expenditure on the contract is transferred to work-in-progress account.

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Problem 7

Choose the correct answer:
Contract costing is a basic method of
(a) financial costing
(b) job costing
(c) specific order costing
(d) batch costing.

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Problem 8

State whether the following statements are True or False:
In cost plus contracts, the contractor will get cost plus a stipulated profit.

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Problem 8

Choose the correct answer:
In contract costing the cost unit is
(a) job
(b) batch
(c) unit produced
(d) contract.

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Problem 9

State whether the following statements are True or False:
Final contract price to be paid is certain in cost plus contracts.

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Problem 9

Choose the correct answer:
A contact that guarantees a certain percentage of profit is known as
(a) incomplete contract
(b) cost plus contracts
(c) work-in-progress
(d) finished goods.

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Problem 10

State whether the following statements are True or False:
Escalation clause in a contract provides that the contract price is fixed.

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02:14

Problem 10

Choose the correct answer:
The escalation clause in contracts are often provided as safeguards against any likely changes in
(a) price of material
(b) price of labour
(c) both a \& b
(d) none of these.

Mihir Nayar

Numerade Educator