The following two questions are designed to demonstrate your understanding of how the basic concepts underlying the design of cost accounting systems for producing goods transfer to a setting where a service is provided. For purposes of illustration, the questions will focus on a professional services environment such as a law practice or an accounting practice. In particular, you will concentrate on an accounting firm that provides financial audits, tax services, and management services.

1.List two items that would normally be captured as direct costs in accounting for the cost of providing accounting services for a particular client.

2.List two items that would normally be captured as indirect costs (i.e., overhead) in accounting for the cost of providing accounting services for a particular client.