Final answer:
The completed-contract method recognizes revenue, cost, and gross profit only at the time the contract is completed, which aligns with answer c of the choices provided.
Step-by-step explanation:
The completed-contract method, often used in accounting for long-term construction contracts, entails recognizing revenue, cost, and gross profit upon the completion of the contract. Specifically, answer c. revenue, cost, and gross profit are recognized at the time the contract is completed, encapsulates the correct application of the completed-contract method. This accounting approach is conservative by deferring all revenue and expense recognition until a contract is wholly executed, thus avoiding recognizing profits on contracts that have not yet been finished.
Understanding when to recognize revenue and expenses is crucial for financial reporting and is influenced by the demand for a firm's products, the total costs incurred in production, and the market structure in which the firm operates.