Contract Costing

Contract Account is prepared in the books of ----------

• Contractee

• Contractor

• Customer

• Both Contractor & Customer

To calculate the percentage of notional profit for transfer to Profit & Loss Account, one must compare -------.

• Cash received to work certified

• Cash received to contract price

• Work certified to contract price

• Work uncertified to work certified

Depreciation on materials -----------------

• Will appear in debit side of contract account

• Will appear in credit side of contract account

• Will appear in debit side of profit and loss account

• Will not appear in any account

When contract is 25% complete ---------- is taken to Profit & Loss Account

• Nil. Entire Profit is kept as reserve.

• NP x1/3 x CR/WC

• NP x2/3 x CR/WC

• NP x1/3 x WC/CP

When a contract is completed at the end of the accounting year, profit is ------------

• Transferred to Profit & Loss Account

• Transferred to Work in Progress

• Transferred to Contract Account

• Transferred partly to Profit & Loss Account and partly to work in progress

In contract costing valuation of which of the following does not include an element of profit?

• a. Work in Progress Certified

• b. Work in Progress Uncertified

• c. Both (a) & (b)

• d. Neither (a) or (b)

Which of the following item is not written on the credit side of the contract account?

• Work in Progress

• Materials returned

• Cash received from contractee

• Plant at site

A contract of Rs. 5,00,000 is 55% complete as certified. It shows a loss of Rs. 1,00,000. Accounting treatment of this loss is to transfer 2/3 x cash received/work certified of 1,00,000 to Profit & Loss Account.

• Yes

• No

Accidental loss of materials issued to contract is Rs. 20,000. Out of this Rs. 15,000 is recovered from an insurance company. The contract account is credited by Rs. ------------.

In a building contract of Rs. 2,40,000, at the end of the year work certified is Rs. 1,60,000 and notional profit is Rs. 15,000. What is the amount of profit to be credited to P & L Account assuming cash received is 80% of work certified.