NASCLA Financial Management and Accounting

Question 1

What is the primary purpose of job cost accounting in construction?

Accepted Answer

To track costs by individual project to monitor profitability and budget compliance

Answer

To track overall company profit only

Answer

To satisfy IRS audit requirements

Answer

To calculate employee payroll taxes

Question 2

Which financial statement shows a company's revenues, expenses, and net profit over a period of time?

Accepted Answer

Income statement (Profit and Loss statement)

Answer

Balance sheet

Answer

Cash flow statement

Answer

Accounts payable ledger

Question 3

What is the difference between 'gross profit' and 'net profit' for a contractor?

Accepted Answer

Gross profit is revenue minus direct job costs; net profit is gross profit minus overhead expenses

Answer

Gross profit includes taxes; net profit does not

Answer

Gross profit is total revenue; net profit is cash on hand

Answer

There is no meaningful difference between the two

Question 4

Which method of accounting is most commonly required for contractors with annual revenues exceeding $26 million?

Accepted Answer

Percentage-of-completion method

Answer

Cash basis accounting

Answer

Completed contract method

Answer

Single-entry bookkeeping

Question 5

What does 'accounts receivable' represent on a contractor's balance sheet?

Accepted Answer

Money owed to the contractor for completed work that has not yet been paid

Answer

Money the contractor owes to suppliers

Answer

Equipment owned by the contractor

Answer

Advance payments made to subcontractors

Question 6

A contractor's 'overhead rate' is calculated by dividing total overhead costs by:

Accepted Answer

Total direct labor costs or total direct costs

Answer

Total revenue

Answer

Number of employees

Answer

Number of projects completed