1. Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted. A company entered into a three-year construction project with a total contract price of $5.3 million and expected cost of $4.4 million. The following table provides cash flow information relating to the contract:

 

 

Year 1

Year 2

Year 3

Costs incurred and paid

$600,000

$3,000,000

$800,000

Amounts billed and payments received

$1,200,000

$2,800,000

$1,300,000

What is the cumulative effect of the contract on the cash balance that would have been recorded on the company's balance sheet at the end of Year 2 using the:

 

percentage-of-completion method?

completed contract method?

A.

$400,000

$400,000

B.

$400,000

$0

C.

$2,800,000

$0

Correct answer = A  The amount of cash recorded is identical for both methods and is equal to the total cash received less total costs incurred. At the end of Year 2, a total of $4 million had been billed and collected but only $3.6 million in costs had been incurred.  
 

无论用哪种会计方法，并不影响现金流，影响的只是利润的确定。现金流是按照真实的现金流入流出来确定的。*9年的现金流量表上有现金的流入$600,000，第二年有现金流出$200,000，所以在第二年年末的时候现金流量表上的余额是$400,000。
 

　　
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