Question
1. Which of the following is true of expired costs? a. Expired costs are reported as fixed assets on a company's balance sheet. b. Expired
1. Which of the following is true of expired costs?
a. | Expired costs are reported as fixed assets on a company's balance sheet. | |
b. | Expired costs are added to revenue to determine income on the income statement. | |
c. | Expired costs are used up in the production of revenue in the period incurred. | |
d. | Expired costs are listed as liabilities on the balance sheet in the period they are incurred. |
2. Which of the following statements best describes an indirect cost?
a. | An indirect cost can easily and accurately be traced to a cost object. | |
b. | An indirect cost is assigned to a cost object using allocation. | |
c. | It is never necessary to track an indirect cost because, by definition, they are not observable costs. | |
d. | Indirect costs most often represent a small percent of the total cost of production. |
3. Which of the following statements is true of cost?
a. | Cost is a dollar measure of the resources used by a business to achieve a given benefit in a current or future period of operations. | |
b. | Cost and price are the same for the owner of a business, but different for the buyer of a product or service. | |
c. | Cost is the revenue earned per unit sold. | |
d. | Costs may be measured in dollars or estimated using historical data. |
4. Which of the following statements describes a characteristic of production costs?
a. | Production costs are immediately reported on the income statement in the time period in which they are incurred. | |
b. | External users of a business's information are not interested in the production costs in inventory and those reported in cost of goods sold. They are interested in the company's financial statements. | |
c. | Managerial accounting measures, records, and reports production costs for internal use only. | |
d. | Production costs are accumulated as inventory on the Balance Sheet until a product is sold. |
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