Earned revenue is $128,000 and billings to date are $118,000. What is the position?
Correct Answer
D) $10,000 underbilled.
Earned revenue exceeds billings by $10,000, so the job is underbilled.
Why This Is the Correct Answer
Earned revenue exceeds billings by $10,000, so the job is underbilled.
Why the Other Options Are Wrong
Option A: $10,000 overbilled.
$10,000 overbilled reverses the direction: the amount is right, but the position is underbilled, not overbilled. The correct calculation is 128,000 - 118,000 = 10,000.
Option B: $118,000 underbilled.
$118,000 underbilled reports the $118,000 billings to date alone instead of subtracting it from the $128,000 earned revenue. The correct calculation is 128,000 - 118,000 = 10,000.
Option C: $246,000 underbilled.
$246,000 underbilled adds 128,000 and 118,000 instead of taking the difference. The correct calculation is 128,000 - 118,000 = 10,000.
Reference Hint
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