COMPLETED CONTRACT METHOD OF ACCOUNTING Definition

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COMPLETED CONTRACT METHOD OF ACCOUNTING is a method of revenue recognition for long-term contracts (i.e., contract which span more than one accounting period) whereby the total contract revenue and related cost of performance are recognized in the period in which the contract is completed. This method stands in contrast to the percentage-of-completion method of accounting and is most often used when significant uncertainty exists with respect to the total cost of performing the contract and, accordingly, the ultimate amount of profit to be recognized thereon.

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RELEVANT RANGE is the range of activity over which changes in cost are of interest to management

COMPLIANCE AUDIT is the review of financial records to determine whether the entity is complying with specific procedures or rules.

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