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In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Which of the following statements is true based on the information related to the contract?

1) The cost incurred during the year 2025 was $3,600,000.
2) The estimated costs to complete as of year-end 2026 were $2,000,000.
3) The billings during the year 2024 were $2,000,000.
4) The cash collections during the year 2026 were $4,600,000.

User Laur Ivan
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1 Answer

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Final answer:

Among the given statements, the only one that can be identified as false is the estimated costs to complete as of year-end 2026 since the road was stated to be completed in 2026. The other statements would require verification from accounting records to confirm their truthfulness.

Step-by-step explanation:

The question presented pertains to the accounting of a construction contract, which involves recognizing revenue and expenses related to the contract over time. In regards to the provided statements:

  • The cost incurred during the year 2025 can be considered a fact if verified by the company's accounting records.
  • The estimated costs to complete as of year-end 2026 being $2,000,000 would not be true, as the project was completed in 2026, and there should be no estimated costs to complete after the project is finished.
  • The billings during the year 2024 being $2,000,000 would be a fact specific to the company's billing schedule and accounting practices; thus, without additional information, we cannot confirm its accuracy.
  • Cash collections during the year 2026 being $4,600,000 is a piece of factual information that could be verified through the company's financial records.

Without further details from the company's financial statements, only the estimated costs to complete as of year-end 2026 being $2,000,000 can be definitively identified as false accounting information, as it contradicts the information that the road was completed in 2026.

User Jordan Ryan Moore
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