Question 9
Dear Student,
Management is not justified in ascertaining Profit & Loss only when contract is completed. Management must accrue its revenue over the period of 4 years & must charge cost as & when incurred.
As per Accrual concept of accounting revenues are reported as & when they are earned & not when received and as per the matching principle the related cost with revenue must also be recorded. Thus, management must show for each year the Profit/Loss situation.
Regards,
Management is not justified in ascertaining Profit & Loss only when contract is completed. Management must accrue its revenue over the period of 4 years & must charge cost as & when incurred.
As per Accrual concept of accounting revenues are reported as & when they are earned & not when received and as per the matching principle the related cost with revenue must also be recorded. Thus, management must show for each year the Profit/Loss situation.
Regards,