CA Inter P1 · Chapter 6 · Question 4 of 8
Case: On a construction contract of Rajmahal Constructions Ltd, costs incurred to date are ₹42,00,000 and recognised profits to date are ₹6,00,000. Progress billings raised to date are ₹45,00,000, of which ₹3,90,000 is still unpaid by the customer. Under AS 7, the gross amount due from the customer for contract work is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹3,00,000
Explanation
The gross amount due from customers = costs incurred plus recognised profits (less recognised losses) less progress billings = 42,00,000 + 6,00,000 - 45,00,000 = ₹3,00,000. The unpaid billing of 3,90,000 is a trade receivable and is not part of this computation.
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