Final answer:
When accounting for a long-term construction contract for which revenue is recognized over time according to the percentage of completion, gross profit is recognized in any year is debited to: Construction in progress.
The answer is option ⇒1
Step-by-step explanation:
When recognizing revenue for a long-term construction contract over time according to the percentage of completion method, the gross profit is debited to the account called "Construction in progress."
This means that as the construction project progresses, and revenue is recognized based on the percentage of completion, the gross profit earned from that project is recorded as a debit entry in the Construction in progress account.
The Construction in progress account is an asset account on the balance sheet that represents the costs incurred and the gross profit recognized on long-term construction projects that are still in progress. It captures the cumulative costs and profits associated with the project until its completion.
The answer is option ⇒1