Operating Expenses Answer the following questions related to operating expenses:
ID: 2722995 • Letter: O
Question
Operating Expenses Answer the following questions related to operating expenses:•How are the operating expenses (not included in the cost of goods sold) handled under the installment-sales method of accounting? •How are they included in the percent-of-completion method? •How are operating expenses handled under the completed contract method? •Of these methods, provide examples of situations when each method will be the most appropriate. Include citations to the resources that you found, to support your response.
Explanation / Answer
a) Operating expenses under the installment method are recognized in the normal way on the accrual basis and they are treated as expenses in the period incurred.
b) Operating expenses are not recognized until the contract is completed.
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