Final answer:
False. Recognized losses on long-term contracts do not reduce the construction in progress account.
Step-by-step explanation:
False. Recognized losses on long-term contracts do not reduce the construction in progress account.
When a business enters into a long-term contract, any recognized losses are typically recorded as an expense in the income statement, reducing the company's net income. However, the construction in progress account, which represents the costs incurred on the construction project that have not yet been completed, is not directly affected by recognized losses. Instead, the construction in progress account is reduced as the project progresses and costs are incurred.