Q168
The amount paid to sub-contractor is ________.
A.
subtracted from the contract price
B.
debited to contract a/c
AnswerC.
credited to contract a/c
D.
added with the contract price
Answer: Option B
Solution
Answer: Option B
Solution:
The amount paid to sub-contractor is debited to contract a/c. Contract means a big job in which work is done at site and not in factory premises. The cost of each contract is ascertained. Thus in this method of costing, each contract is a cost unit and an account is opened for each contract in the books of contractor to ascertain profit/loss thereon.