The amount paid to sub contractor is ........

Costing - Phase (I & II) Methods of Costing

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The amount paid to sub-contractor is ________.

subtracted from the contract price

debited to contract a/c

credited to contract a/c

added with the contract price

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Explanation:

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.