The Body of Knowledge for CCIFP’s Income Recognition – Questions

Income Recognition:

We’ve previously discussed Income Recognition and how it differs in construction accounting versus other industries.

By now I’ll assume everyone has “The Book” or has been following along. If you are just getting started or new following the CCIFP Study Blog, you can read up on the Income Recognition or get a copy of “The Book” by clicking this link.

I’d like to thank you all for following, and encourage your feedback / responses. Feel free to comment anytime!

Alright then…. Let’s get started!

Referring to “THE BOOK”, The Body of Knowledge for CCIFP’s and a Primary Certification Resource – We are going to discuss Chapter 4 – Income Recognition-

Better Yet…. I’m going to push out some questions and let you do a little bit of research. Then, for our next post, I’ll give you the answers…. Refer to “The Book” Chapter 4 – Income Recognition

4.01 Financial Reporting

  1. Authoritative Literature
    1. The AICPA in 1981 (after more than five years of deliberation and study), issued a new Audit and and Accounting Guide, “Construction Contractors”. Simultaneously, the AICPA issued a statement of Position 81-1 now known as:
      1. ASC 605-50
      2. ASC 605-25
      3. ASC 605-45
      4. ASC 605-35
  2. Acceptable Income Recognition Methods
    1. Of the two GAAP acceptable methods for income recognition, which one is more preferred?
      1.  Cash Method
      2. Percentage of completion method
      3. The hybrid method
      4. Completed contract method
  3. Acceptable income Recognition Methods in accordance with GAAP
    1. Completed contract method
    2. Hybrid Method
    3. Cash Method
    4. Accrual
  4. Which income recognition method is considered the Percentage of Completion method?
    1. Revenue, costs and gross profit are recognized when completed
    2. Revenue, costs are booked when occurred
    3. Revenue, costs are booked when cash is received
    4. Revenue, costs and gross profit are recognized in all accounting periods throughout the duration of the contract
  5. These methods except one, are only acceptable for financial reporting in:
    1. Cash basis
    2. Accrual (Billing)
    3. Completed Contract Method
    4. Hybrid Basis

Whew!! OK, I’ll stop at five questions for now, let’s dive into “The Book” and figure the answers.

There is one answer per question!

Answer will be on the next post…

Until next time…. see you then!!

 

 

 

 

 

 

Author: Terry Kelley MBA

Controller in the Construction industry. Over the past 30 years I have worked as an electrician (studied 3 years at CCVTC -for Electrical) for 6 years. I've owned my own construction company for over 15 years (where I wore many hats) to include accounting and finance. And, for the remainder of my career I have and still are working as a Controller in the Construction Industry. I have earned my Bachelors degree and MBA in accounting. Now, I am working to earn my CCIFP certification. I have put together this study group in hopes of working together with other CCIFP candidates.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s