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a. First item of the income statement is revenues from operations, then it will be added other revenues and become recurring income before tax and interest. After interest of financing paid, it becomes the recurring income from the continuing operations. Then it adds or minuses the unusual or infrequent items and become the pretax income from continuing operations. The recurring income from continuing operations is the most important indicator the analysts pay attention to. Then after tax it will be adjusted by income or loss from discontinued operations, extraordinary items and cumulative efforts of accounting changes. The big difference between unusual items and extraordinary items is net of tax or not.

b. Two options, i.e. completion of the earnings process and insurance of payment, must be met. According to different situations generally there are five methods that company usually uses, i.e. the sales basis method, the percentage-of-compilation method, the completed contract method, installment of sales method and costs recovery method. In percentage-of-compilation method the costs and revenues estimates are reliable, whereas the completed method is not sure about the costs estimate and no revenues are recognized until the long term earnings process is completed. But each has no effects in cash flow.

c. The construction-in-process account of percentage-of-completion composes cumulative costs and profit. The profit is the outcome of the total profit multiplying the proportion of cumulative costs in total costs. This account is not the same as in the balance sheet. It will be compared with the advance billings. And if the construction-in-process the margin will show in assets side, otherwise in the liabilities side as advance billings.