Answer to Question 1
In the percentage-of-completion method, the earnings are estimated by multiplying the percentage completed by the contract value and subtracting the costs to date. In the completed-contract methods, the company does not take credit for any profit until the project is completed, and the contract closed out.
Answer to Question 2
A cash accounting system reports revenues and expenditures in the accounting period in which cash is received or disbursed. An accrual accounting system recognizes revenues when they are earned and expenditures when they are incurred, regardless of when the actual cash transactions occur.
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