How much revenue has CBA earned in December if it completed 40% of a job for which it collected $20,000?

How much revenue has CBA earned in December if it completed 40% of a job for which it collected $20,000?

• A. $20,000
• B. $12,000
• C. $8,000
• D. $0

Answer: (C)

To determine how much revenue CBA has earned in December, we need to apply the percentage of completion method, which recognizes revenue based on the portion of work completed relative to total expected revenue. In this case, CBA completed 40% of a job for which the total amount collected was $20,000. Since revenue recognition is based on the degree of completion, we calculate the revenue earned by taking 40% of the total revenue expected. Calculating 40% of $20,000 involves multiplying: \[ 0.40 \times 20,000 = 8,000 \] Thus, CBA has earned $8,000 in revenue for December based on the percentage of the job completed. This approach aligns with accounting principles that dictate that income should be recorded as it is earned rather than simply at the time payment is collected.

To determine how much revenue CBA has earned in December, we need to apply the percentage of completion method, which recognizes revenue based on the portion of work completed relative to total expected revenue.

In this case, CBA completed 40% of a job for which the total amount collected was $20,000. Since revenue recognition is based on the degree of completion, we calculate the revenue earned by taking 40% of the total revenue expected.

Calculating 40% of $20,000 involves multiplying:

[

0.40 \times 20,000 = 8,000

]

Thus, CBA has earned $8,000 in revenue for December based on the percentage of the job completed. This approach aligns with accounting principles that dictate that income should be recorded as it is earned rather than simply at the time payment is collected.