nil
20%
25%
75%
Answer is Right!
Answer is Wrong!
The correct answer is A. nil.
The profit to be transferred to profit and loss account is the amount of profit that has been earned on the contract to date. If the contract is only complete to the extent of 20%, then no profit has been earned on the contract and therefore no profit should be transferred to profit and loss account.
Option B is incorrect because it would result in the company recognizing profit that has not yet been earned. Option C is incorrect because it would result in the company recognizing less profit than has actually been earned. Option D is incorrect because it would result in the company recognizing more profit than has actually been earned.