1. Which of the following is true of expired costs? a. Expired costs are reported as...
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. |
Homework Answers
1. Option (c) is correct
Expired costs are used up in the production of revenue in the period incurred.
2. Option (b) is correct
Indirect cost is assigned to a cost object using allocation.
3. Option (a) is correct
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.
4. Option (d) is correct
Production costs are accumulated as inventory on the balance sheet until a product is sold.
Add Answer to:
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account for its affect on the balance sheet.)
2. What is Morrison Company’s net operating income for the month
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1. Calculate the ending balances that would be reported on the
company's balance sheet on January 31st. (Hint: Be sure
to calculate the underapplied or overapplied overhead and then
account for its affect on the balance sheet.)
2. What is Morrison Company’s net operating income for the month
of January?
$ 36,900 Morrison Company Balance Sheet January 1 Assets Cash Raw materials Work in process Finished goods Prepaid expenses Property, plant, and equipment (net) Total assets Liabilities and Stockholders' Equity...
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