Business FinancesQuestion 1172 of 1605
Under cash-basis accounting, a contractor records income when:
a.The work is 50% complete
b.Cash is actually received
c.The contract is signed
d.The invoice is mailed
Explanation
Cash-basis accounting records income only when cash is actually received and expenses only when actually paid. It is simple but can distort profitability on projects that span the recording of revenue and costs in different periods.
Practice all 1605 questions free — no signup required.
Related questions on this topic
- For how long should a contractor generally retain business and tax records to support filed returns and defend against audits?
- Accurate job-cost records are important primarily because they:
- Which record-keeping method records revenue when it is EARNED and expenses when they are INCURRED, regardless of when cash changes hands?
- A city business license (business tax certificate) is:
- A building permit for a construction project is generally obtained from:
- A contractor who performs work requiring a license without being properly licensed at all times during the project:
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)