CONTRACT COSTING Definition

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CONTRACT COSTING is mainly associated with civil engineering works, although sometimes also with the manufacture of a major engineering structure over a considerable time (for example, a contract to manufacture a turbine generator).

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SEPARATE DETERMINATION CONCEPT holds that each component of any category of assets or liabilities should be valued separately when arriving at a total to be shown in the accounts for that category. For example, the value of each stock item should be calculated individually (at the lower of cost and net realizable value) and these values should then be totaled to give the stock figure which will appear in the accounts. Stock should not be valued at the lower of total cost and total NRV.

INCORRECT ACCEPTANCE, in accounting, is the risk the sample supports the conclusion that the recorded balance is not materially misstated when it is materially misstated.

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