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Chapter 10

Accounting for construction contracts

2.1 Four steps for the accounting of construction contracts

STEP (1) Determine if overall contract is PROFITABLE (looking out for loss making
contracts).

STEP (2) Determine the STAGE OF COMPLETION of the contract.

STEP (3) Calculate figures for the current period STATEMENT OF PROFIT OR
LOSS.

STEP (4) Calculate figures as at the reporting date for the STATEMENT OF
FINANCIAL POSITION.

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