Category Archives: Practical Accounting 2

Long Term Construction Contracts

Methods on Calculating Realized Gross Profit : Percentage of Completion Method – with dependable estimates or known as cost to cost method. Zero Profit- with no dependable estimates. Things to remember under Percentage of Completion Method: *Contract Price equals Total … Continue reading

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How to Calculate Realized Gross Profit?

1st  Calculate the Gross Profit Rate = Installment Sales / Cost of Installment Sales or Deferred Gross Profit / Installment Accounts Receivable 2nd Determine Cash Collections Installment Accounts Receivable Beginning – Installment Accounts Receivable Ending 3rd Check if there is … Continue reading

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Installment Sales

The usual method of accounting for recognition of revenue is Accrual Method, but there is 3 exceptions: Installment Sales – profit is recognized at the point of sale. Long Term Construction  – recognized sales gains and losses even at the … Continue reading

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